Costco Credit Card: A Review
The Costco Credit Card may be the best credit card available. It is worth joining Costco for the card alone.
Most people will benefit from a Costco membership. It is not true that you lose money by buying in bulk if you don’t have a large family. Yes, buying 10 pounds of onions may not be a good idea for a single person, but there are plenty of wise purchases, even for small households. Put all that aside and consider the Costco credit card. I am not paid in any way for this review, and I don’t have any relationship with Costco, except that I am a happy member and I love the card.
The Costco Credit Card doubles as your membership card. It has no annual fee and no foreign transaction fees. We were just in Europe; if we had paid with many other cards, we would have incurred fees as high as 3%. That’s a big deal.
The main benefit of the Costco Credit Card’s is the cash back. If you reach a threshold of $300 in cash back in a year, you can usually have the money deposited into your bank account. Less than that, you typically get a gift certificate to be used at Costco, but you will easily be able to use it over the next few trips to the store.
The Costco card gives you 5% cash back if you buy gas at Costco. It is 4% if you buy gas anywhere else. By the way, Costco gas is Top Tier and usually much less expensive than other stations. Five percent adds up—If you pay $60 to fill your tank at Costco, you get $3 cash back. You also get 4% back on charging your electric vehicle.
Restaurants are 3% cash back. This is for all types of restaurants, including high-end, fast food, and coffee shops. Think about how much you spend on restaurants. Every hundred dollars gets you three dollars back. I would never pay with any other card at a restaurant.
The travel benefits may be the best features. On flights you purchase with the Costco Card, you get 3% back. That is better than most, if not all, airline credit cards. You also get 3% on hotels and rental cars. Anything you book on Costco Travel is also 3% cash back. I highly recommend Costco Travel. I use it mostly for rental cars. For many years, I have not found a better deal than Costco for rental cars, and I look for every discount. They also use only top rental car companies. When you rent a car, you pay nothing up front, and there are no cancellation fees. I regularly recheck the price, and if it has dropped, then I book the car at the lower price and cancel the old reservation. The cash back can add up. If you pay for two flights and two cars in a year, you will easily pay for your Costco membership with the money you get back. If you are an executive member, as I am, you get an additional 2% cash back on everything you buy at Costco, including Costco Travel.
One point about the executive membership cash back—it comes in a separate payment from the Costco card cash back payment. The credit card cash back comes in February, and the executive membership money comes a couple of months before your annual renewal.
What about the pharmacy at Costco? I love the pharmacy. I pick up my medications when I am shopping at Costco anyway, but they also deliver. They take virtually every insurance, but sometimes their cash-pay prices are very low. (Be careful paying cash. If you don’t go through your insurance, it won’t count against your deductible.) At the pharmacy, you get 2% cash back with your Costco card, and another 2% back if you are an executive member.
The card has a few other benefits. The website mentions theft and damage protection for 3-4 months after purchases, and there is travel assistance. I haven’t used either of these. Car rental insurance comes free with car rentals. I am not a lawyer or expert in insurance, so read the fine print. This is what the site says today: “You may be covered against theft or damage to a rental car when you pay for your rental with your Citi card and decline the rental company’s collision loss/damage insurance.”
There is one small feature I want to point out. If you have someone else on your Costco Credit Card account—my wife is on my account—you each have a different credit card number. My wife and I were recently traveling in Boston. I lost my credit card and canceled it on the app. My wife’s card still worked, so I didn’t lose any cash back when we paid for the hotel. In all honesty, I should note that I also lost her card later in the trip. Fortunately, I remembered leaving it at a coffee shop, and we got it back the same day.
Downsides of the Costco Credit Card: There are only a few. You must be a member of Costco. If you don’t meet the $300 cash back threshold for a year, you receive your cash back in a Costco gift certificate. If you reach the $300 threshold, you can deposit the money into a bank account. Note that I always recommend putting the money into your bank account. If you use the certificate at Costco, you can’t use your credit for those purchases, so you miss out on cash back.
In all, I have been very happy with my Costco card. You should definitely consider it if you are a Costco member. If you are not a Costco member, you should consider becoming one.