BACK

Cash Back

With Costco and AmEx splitting, don’t rush to switch cards

Summary

Costco will be ending its exclusive relationship with American Express. But there’s no need to drop the Costco AmEx card right away. Wait to see what new cash-back deals shake out

The editorial content below is based solely on the objective assessment of our writers and is not driven by advertising dollars. However, we may receive compensation when you click on links to products from our partners. Learn more about our advertising policy.

The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Please see the bank’s website for the most current version of card offers; and please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.

 

QuestionDear Cashing In,
I have the True Earnings card from American Express and Costco, but I read last week that those two companies are ending their partnership. Should I cancel that card and apply for something else? — Joyce

AnswerDear Joyce,
It is true that American Express recently announced that the partnership between it and discount wholesale club Costco is ending. Under that arrangement, Costco only accepts American Express cards — and the two companies offered the True Earnings card (no annual fee with paid Costco membership). The card gives 3 percent cash back on gas, 2 percent back on restaurants and travel and 1 percent on all else. The cash back is in the form of coupons for use at Costco.

Costco and American Express apparently could not make the arrangement work financially for both of them. Costco is exploring a partnership with other card companies, including Chase and Citi, according to the Wall Street Journal.

An important point here is that nothing will happen until early 2016, so there is no rush to do anything differently at this point. The partnership agreement runs until March 31, 2016.

In fact, waiting can be the smart move, because you might have a couple different banks trying to woo you with sign-up offers.

We see these types of card partnerships end regularly in the airline industry, especially after mergers. Typically, the bank that no longer has the relationship with the airline will try to move its customers to a different travel card, while the bank with the airline relationship will send offers attempting to entice you to apply for a new card.

That could happen here. It would probably make sense for American Express to try to migrate you to one of its other cash-back cards, such as its Blue Cash Everyday (no annual fee) or Blue Cash Preferred ($75 annual fee), which offer extra money back at supermarkets, gas stations and certain department stores. An American Express spokeswoman did not return an e-mail last week seeking comment.

In addition, whichever bank partners with Costco will probably see you as a desirable customer and want you to apply for a card linked to Costco. They know you have a reliable history of shopping at Costco, so you would be a natural target of a marketing campaign, perhaps with some added incentives to entice you to switch.

Of course, you’re not bound to either of those options. You can look around for other cash-back cards that interest you. One of the notable features of the True Earnings card is that, unlike some other retail or travel cards, it does not really give you extra incentives to shop at Costco. It doesn’t give you extra cash back or other incentives for shopping there in the way that, say, Target’s Redcard does, with 5 percent off purchases at Target.

That means that a regular cash-back card from another bank could give you close to the same rewards you currently enjoy on the True Earnings card, depending on where you spend your money.

If I were you, Joyce, I would start looking around at other cash-back cards on the market. Before deciding on one, see what American Express proposes to offer you and find out what Costco’s new partner is going to offer. News reports say Costco is close to announcing a new partner.

Then take the information and make an informed decision.

See related:Poll: Wealthy cardholders prefer cash-back rewards, Which credit cards earn the most reward points at Wal-Mart?

 

What’s up next?

In Cash Back

Not all ‘digital wallets’ give you bonus reward points

If you’re using a mobile wallet to make purchases using your American Express card, you may not get get those bonus rewards points the card promises

Published: February 10, 2015

See more stories
Credit Card Rate Report Updated: April 20th, 2019
Business
15.32%
Airline
17.50%
Reward
17.56%
Cash Back
17.60%
Student
17.79%

Questions or comments?

Contact us

Editorial corrections policies

Learn more

Join the Discussion

We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company’s business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.