Costco is a favorite wholesale shopping destination for many people, and it is generally considered a bit better than competitors such as Walmart-owned Sam's Club and BJ's. One distinctive thing about Costco is that it partners with only one credit card network at a time. Before 2016, its long-time partner was AMEX, so AMEX cards were the only credit cards accepted at Costco. In 2016, however, Costco signed a new agreement with Visa and Citi, began accepting Visa cards, and stopped accepting AMEX cards. Because the transition was not completed on schedule, the conversion date was delayed again and again. Now Costco has finally confirmed that starting June 20, 2016 (inclusive), AMEX cards will no longer be accepted, and in-store purchases can only be made with Visa cards. If you still want to use an AMEX card, June 19 is the last day.
Details
- Costco warehouses (including gas stations) will accept AMEX cards through June 19, and Visa cards starting June 20.
- Existing AMEX Costco cardholders will be converted to the Citi Costco credit card, which runs on the Visa network. The benefits are basically unchanged and similar to the old AMEX Costco card. There will also be no hard pull. Cash back will be moved to the new account as well.
- This transition does not affect purchases on Costco.com. Costco.com will continue to accept all Visa, Mastercard, AMEX, and Discover cards.
Chase Freedom Q2 5x Category
Chase Freedom's Q2 (April through June) 5x category includes Wholesale Clubs. The good news is that Costco is included. That means once Costco starts accepting Visa on June 20, purchases made at Costco with Freedom during the remaining 11 days before June 30 can earn 5x Ultimate Rewards points, including gas purchases. Considering Costco gas is often 5-10% cheaper than other gas stations, filling up at Costco is without a doubt one of the cheapest options for Costco members.
But are we limited to spending only during that 11-day window? Not necessarily. Because Costco.com's Visa merchant category code (MCC) is 5399 (Reddit post), online purchases can earn Freedom's 5x points. You can click here to buy a Costco Cash Card (denominations from $25 to $1,000) and lock in Freedom's 5x earnings. Once you receive the card, just use the Cash Card for gas or purchases at Costco. It's that simple.
Citi Costco Card
This new card is reportedly opening for applications soon, but we strongly do not recommend applying for it. You can easily earn better cash back with cards like the Chase Freedom Unlimited or Citi Double Cash.
Summary
If you're a Costco member and expect to spend at Costco (whether on groceries or gas), it may make sense after April to stock up on enough Costco Cash Cards through Costco.com. Don't forget that the quarterly 5x spending cap is $1,500. As for the new Citi Costco credit card, stay away! Are you a Costco member? Share your thoughts in the comments.