What does Costco’s split from American Express in favor of Citigroup and Visa mean to cardholders? Three words: More cash back. And in recent weeks, the biggest U.S. retailer, Walmart, and Bank of America and Chase have stepped up the rewards offered with some of their own cards.
The new card on the block
Citi purchased AmEx’s portfolio of Costco-branded credit cards in February, and Costco AmEx cardholders will be able to use the new Costco Anywhere Visa cards starting June 20. No muss. Not much fuss (although some cardholders aren’t happy with the change). No additional application process for the new card and no credit pull.
The new credit cards don’t have an annual fee, but Costco customers do have to pay the warehouse club’s membership fee of $55.
Already have a Visa? You’ll be able to use any Visa at Costco starting June 20.
Until then, Costco shoppers paying with plastic will need to hang on to that American Express card. Costco AmEx transactions will cease after June 19.
In addition to greater flexibility at the register (Visa is the largest card network in the U.S.), Citi is giving Costco customers better credit card rewards.
Costco Visa cardholders will get 4 percent cash back on gas (up to $7,000 annually, then 1 percent after that), 3 percent on restaurants and certain travel purchases, 2 percent on purchases made at Costco and 1 percent on everything else.
Under AmEx, cardholders received 3 percent on gas (up to $4,000 annually), 2 percent on restaurants and travel and 1 percent on everything else.
Awards earned by Costco AmEx customers will be transferred to the new Visas after the switch.
Credit card competition heats up
Just weeks after news of the impending Costco switch to Visa, Walmart announced increased rewards for its credit cards and prepaid MoneyCards.
These higher awards include 3 percent cash back on Walmart.com purchases, 2 percent on gas purchased at Walmart or Murphy gas stations, 1 percent on purchases made in-store and everywhere else.
That’s up from $5 in cash back for $500 spent at Walmart, and 5 cents per gallon on gas at Walmart gas stations.
Worth noting is that Costco rival Walmart’s Sam’s Club has its own cash back program similar to Costco’s new one — 5 percent cash back on gas at Sam’s Club, 3 percent cash back on dining and travel and 1 percent cash back on all other purchases. Sam’s Club went through its own card network switch in 2014, shifting from Discover to MasterCard.
Starting June 1, Bank of America increased cash rewards for BankAmericard cash rewards cardholders, adding wholesale and warehouse clubs to the 2 percent cash back category, which includes grocery stores. The quarterly cap on cash-back earnings also increased to $2,500 from $1,500 on purchases at grocery stores, wholesale/warehouse clubs and gas stations.
And Chase’s Freedom Visa now includes wholesale clubs, including Costco, Sam’s Club and BJ’s, in the 5 percent cash back category through the end of the year. The 5 percent cash back on purchases at wholesale clubs was to end at the end of the quarter, which is June 30.
The bottom line
With increased payment flexibility for Costco customers, better rewards for cardholders and increased credit card competition, it’s a win-win-win for card users.
What do you think of the card switch and rewards changes? Drop me a line. Let us hear from you.