Costco switched card partner from American Express to Visa in June 2016. We answer the most-common reader questions about Citi’s Costco Anywhere Visa card.
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Since Costco shifted to a new store credit card and to accepting only Visa cards, questions about the effect of those moves on consumers have been among the most popular reward card questions from CreditCards.com readers.
There were a lot of moving parts to the Costco card switch, which took place in June 2016.
First, Costco switched from American Express as its card partner to Citi, so Costco customers with the old Costco American Express card received a new Citi Costco Anywhere Visa, which has a different reward structure from the old American Express cards.
Second, Costco has been well-known for accepting only one brand of credit card. Until June 2016, it was American Express. But after that, the store would accept any Visa card – and not American Express.
That opened up new possibilities for using additional reward cards at Costco. But it also leads to lots of questions, especially if you throw in executive memberships at Costco, which earn an additional 2 percent reward that is independent of credit card use.
Here are some of the most common questions surrounding Costco, reward cards and alternatives to them:
Q: What are the main features of the Citi Costco Anywhere Visa?
A: The new card from Citi offers some compelling perks:
- 4 percent back on gas, on the first $7,000 per year, then 1 percent after.
- 3 percent back on restaurant and travel purchases.
- 2 percent back on all other purchases from Costco and Costco.com.
- 1 percent on everything else.
- No foreign transaction fees.
Compared with other reward cards, the percentage back on gas, restaurants and travel is on the high side.
Q: What are the downsides to this card?
A: I wouldn’t go so far as calling them downsides, but there are a few things you should know:
- The Citi Costco Anywhere Visa card has no annual fee, but to apply, you must be a Costco member. A basic membership is $60 a year (plus tax). An executive membership is $120 a year (plus tax).
- The cash back on the card comes in the form of an annual certificate included in February billing statements. It can be redeemed for cash or merchandise at Costco stores.
Q: I’m a Costco member considering applying for Costco’s Visa card, but my credit score is not stellar. What are my chances of being approved?
A: It’s hard to know for sure. The best reward cards tend to be aimed at people with excellent credit – credit scores of 720 and above.
One must have excellent credit to qualify for this card. But if you look on some internet forums about this card, you will read that some people say they were approved for it with scores in the low 700s and even the 690s, which is considered good credit but close to the fair credit range.
If you are a borderline candidate, you might be approved, but with a low credit line.
Q: I already have a rewards/cash back Visa card and a Costco membership. Does it make sense to apply for Citi’s Costco Anywhere Visa card?
A: That depends on a few factors, including how much you shop at Costco, how much you get back on your existing card and whether you want another credit card.
The Costco Anywhere Visa gives you an additional 2 percent back when used at Costco. There are a small number of cash back cards on the market that offer a flat 2 percent back or more, so it is likely you could do better on your Costco purchases using the Costco Anywhere card. And 4 percent back on gas is generous, too, as is the 3 percent at travel and restaurants.
Most cash back cards are not as generous in rewards in those categories as the Costco Anywhere Visa by Citi. Remember, though: You won’t see the cash immediately: You’ll receive a certificate for the amount once a year, to be redeemed at Costco.
Q: I received Citi’s Costco Anywhere Visa card, although I already had another Visa card. I’ve now realized I don’t need/want to have two Visa cards. Is it wise to cancel one? Is there a way to do so without hurting my credit score?
A: If you have good credit and close a credit card account, there will be a small and short-lived negative effect on your credit score – probably not enough to worry about. This is mainly because you will suddenly be using a higher percentage of your available credit, and that is a factor in your credit score (called credit utilization).
If both cards have no annual fee, you might consider keeping both, even if you don’t use one. Having longtime card accounts that are in good standing helps your credit score. You can stick one of the cards in a drawer. Certainly, if you have a card that charges an annual fee, and you anticipate not using that card, you should consider canceling the account. Sometimes, people don’t like the hassle of keeping up with too many cards, even those they don’t use, and that is a legitimate reason to cancel, too.
Q: I’m a Costco executive member who pays at Costco with a Visa card different from the Costco Anywhere Visa Card by Citi. Am I still eligible for cash back on my purchases?
A: Yes. The Costco executive membership is an entirely separate rewards program from the Citi Costco Anywhere Visa.
- Costco executive members earn 2 percent back on Costco purchases.
- Note that these memberships cost $60 a year more than basic memberships, so you’ll want to make sure that your 2 percent reward is greater than $60 a year.
- That means you need to spend $3,000 a year at Costco – or about $250 a month – to break even on the additional membership fee.
You earn the executive membership rewards regardless of how you pay for your Costco purchases. Be aware that gas purchases, plus some purchases of tobacco and alcohol, are ineligible to earn rewards.
In addition to the rewards from the executive membership, you earn the rewards that come with your card – whatever those might be. Of course, if you had a Costco Anywhere Visa Card by Citi and you are an executive member, you will earn in effect 4 percent back (2 percent from the card, 2 percent from the executive membership).
Q: The American Express co-branded Costco card was the only American Express card I had. I’m now considering applying for an AmEx card again. What are my best options? Will my previous history with American Express through its Costco co-branded card help me get approved for an AmEx card or get me better terms?
A: One common question from readers is, “What is the best rewards card?” And that is very difficult to answer without knowing a lot more about the person’s spending habits and what kind of rewards he or she prefers.
American Express, like most major card issuers, offers a wide variety of reward credit cards – from cash back cards with no annual fees, to cards that earn extra points at grocery stores to co-branded airline and hotel cards to upscale travel reward cards that cost $450 a year. There is a wide range.
Certainly, your previous experience with American Express will help, but even more important is your overall use of credit. American Express will consider much more than just your previous experience with the company.
Q: I have a Citi Double Cash Card. Can I use it at Costco?
A: Unfortunately, no. The Citi Double Cash Card is a Mastercard, and Costco accepts only Visa.
Q: What is the APR of the Costco Anywhere Visa card by Citi?
A: If you apply and are approved for the Costco Anywhere Visa Card by Citi as a new account holder, your card’s APR will be 16.74 percent (variable), according to Costco’s website.
Q: Do all gas station purchases earn a 4 percent cash back?
A: No. When you read the details of the program terms, it says this: “You will only earn 1 percent cash back, not 4 percent, for gas purchased at superstores, supermarkets, convenience stores and warehouse clubs other than Costco or for fuel used for nonautomobile purposes.”
That set off some alarm bells when the program was first announced in 2016, given that 80 percent of all fuel in the U.S. is sold at convenience stores, according to the Association for Convenience & Petroleum Retailing, a trade group.
However, you shouldn’t worry. Here’s why: Card companies know what type of merchant you are charging at only via the merchant category code (MCC) that the card networks assign to individual businesses. Visa has separate codes for miscellaneous food stores/convenience stores (5499), service stations (5541) and automated fuel dispensers (5542). Supermarkets and warehouse clubs also have separate codes. Citi does not control how merchants are coded.
Citi confirmed that the Costco Anywhere Visa Card will give 4 percent at merchants classified as gas stations. In practice, most places where you pump gas are coded as gas stations, not as convenience stores – even if they are affiliated with a convenience store that offers the usual array of gum, lottery tickets, old-looking hot dogs and cold beer.
So rest easy. Your gas purchases probably qualify for the 4 percent cash back (and the purchases of hot dogs and cold beer at those places probably do, too).
Q: Are there limitations on restaurants?
A: Yes. The program terms state, “You will only earn 1 percent, not 3 percent, for purchases made at bakeries and certain restaurants/cafes inside department, grocery or warehouse clubs.”
Again, it will depend on which merchant category codes qualify for the 3 percent and how a particular eatery is coded. There are separate MCCs for bakeries, bars/lounges and restaurants. The reason some purchases at cafes and restaurants inside department stores and grocery stores might not qualify is because those locations are often coded as department and grocery stores, not as separate restaurants.
Q: Are there foreign transaction fees on this new card?
A: No. Beginning Jan. 26, 2018, the Costco Anywhere Visa card stopped charging foreign transaction fees for purchases made when shopping abroad or on an international retailer’s website.
Incidentally, if shopping at warehouse clubs figures into your vacation plans, Costco says there is no foreign transaction fee for charges at foreign Costco stores, although not every foreign Costco accepts Visa cards.