Sam's Club 5-3-1 card generates bulk-buying buzz
By Tina Orem
June 26, 2014
Frugality is a necessity for most of us, but it can also be a source of cheap thrills. After all, when you get down to it, there's something exciting about buying 160 rolls of toilet paper at the local warehouse club. Maybe it's the knowledge that you won't have to buy toilet paper for another 18 months. Or maybe it's the buzz from knowing you're only spending 9 cents a roll when everyone else is paying three times as much. (Suckers!)
Sam's Club decided to capitalize on that bulk-buying high by announcing a cash-back credit card program on June 3. The card, called the Sam's Club 5-3-1 MasterCard, has perks that make those big-haul trips even more enticing, because it offers 5 percent cash back on gas purchases, 3 percent on dining and travel purchases, and 1 percent cash back on all other purchases.
[Related story: Wal-Mart dumps Discover for MasterCard]
There is no annual fee, but you'll have to be a member of Sam's Club, and that costs at least $45 a year. Once you have the card, you can earn rewards anywhere.
Well, almost anywhere.
You won't earn cash back for gas purchases made at “certain” warehouse clubs and supercenters (you have to have the card to find out what those are, however). Dining and travel purchases don't earn cash back if they're made at “other warehouse clubs” either, according to the terms and conditions.
You'll also have to watch it when buying gas from grocery store gas stations. Credit cards identify stores by their Merchant Category Codes (or MCC codes), which differentiate grocery stores, convenience stores, gas stations and other retail outlets from one another in the system. Gas stations at grocery stores may not carry a gas station MCC, which means you won't earn 5 percent on those gas purchases.
The card only will pay you $5,000 back a year, max. That sounds like a low limit, given that a trip to a warehouse club often means spending at least $100. But you'd have to be a pretty big spender to hit the cashback reward ceiling. For instance, you'd have to spend at least $100,000 on gas, or $167,000 on dining and travel, or at least $500,000 on all other purchases.
The reward limit is tied to the calendar year, which means that the clock starts over again on January 1. The company sends you your cashback reward check once a year with your February card statement and you have six months to use it.
The catch is, the check is made out to Sam's Club, and you can only cash it at Sam's Club (you'll also need to show a photo ID to redeem your credit). That could be a bit of a hassle, but then again, you have all that toilet paper to buy.
On the plus side, Sam's Club 5-3-1 MasterCard is notable because it's one of the few U.S. credit cards with an embedded Europay, MasterCard and Visa (EMV) smart chip. The EMV chip encrypts transaction data differently every time the card is used, meaning the card data cannot be used for creating counterfeit cards. This makes the transaction process more secure than with a magnetic stripe card.
The company hasn't disclosed the APR or put a credit card agreement on file with the Consumer Financial Protection Bureau yet, but Sam's Club spokeswoman Tara Roddohl said: “The annual percentage rate for all transactions on the new Sam's Club MasterCard account will be the same APR for all transactions on the existing Sam's Club Discover card account and if applicable will continue to vary with the market based on the prime rate.” That works out to between 14.9 percent and 22.90 percent, depending on your credit.