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Is the Costco Credit Card Worth It?

Is the Costco Credit Card Worth It?
Is the Costco Credit Card Worth It?

Is the Costco Credit Card Worth It?

The Costco Anywhere Visa® by Citi offers robust rewards on Costco spending and gas purchases. But does it make sense for your wallet?

In this guide, we’ll analyze the Costco credit card’s benefits, earnings rates, fees, and approval requirements. Read on to determine if the Costco Anywhere Visa lives up to the hype for Costco devotees and everyday spenders alike.

Costco Credit Card Overview

The Costco Anywhere Visa pairs well with a paid Costco membership by offering:

  • 4% cash back on eligible Costco gas purchases
  • 3% cash back on restaurant and eligible travel purchases
  • 2% cash back on all other Costco purchases
  • 1% back on non-Costco purchases
  • Various Costco and Citi Visa benefits like rental car insurance
  • No foreign transaction fee on purchases outside the U.S.

Now let’s take a deeper look at the rewards structure and perks.

Earning Cash Back with the Costco Credit Card

The Costco Anywhere Visa provides accelerated rewards in these categories:

4% Back on Gas

  • Earn 4% on the first $7,000 in gas purchases each year, including Costco gas stations
  • Then 1% back thereafter

3% Back on Restaurants and Travel

  • 3% back on eligible dining purchases including takeout and delivery services
  • 3% back on travel purchases like airfare, hotels, car rentals, taxis, etc

2% Back at Costco

  • Earn 2% back on all eligible Costco purchases except prescriptions
  • Includes Costco Shop Card purchases and Costco.com

1% Back Everywhere Else

  • Earn 1% back on non-bonus category everyday purchases

There are no limits to how much total cash back you can earn.

Costco Credit Card Benefits and Perks

Along with the rewards, the Costco Visa includes these premium perks:

  • Damage and theft coverage for new phones when costs are paid with the card
  • Travel and emergency assistance services
  • Lost luggage reimbursement
  • Travel accident insurance
  • Car rental collision damage waiver coverage
  • Purchase protection on new items bought with the card
  • Extended warranty on eligible items
  • No foreign transaction fee on international purchases

These benefits offset the card’s lack of travel and shopping protections.

What’s the Approval Requirement for the Costco Card?

To qualify and use the Costco Anywhere Visa, you must:

  • Have an active paid Costco membership
  • Receive approval based on creditworthiness

Approval odds are best with a FICO score over 700, but even applicants in the mid-600s may get approved with good income and credit history. There are reports of approval with scores around 650.

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This card doesn’t require an excellent score since the benefits encourage membership renewal and loyalty.

What Are the Costco Credit Card Fees?

The only fee is an annual fee of $60 for primary cardholders. But keep these additional policies in mind:

  • Authorized users get one free additional card. $60 fee for each extra user after that.
  • Accounts inactive for 12 billing cycles incur a $60 fee.
  • No foreign transaction fee for overseas purchases (uncommon for a no-annual-fee card)
  • Up to 27.99% variable APR on purchases and cash advances

While you pay an annual fee, the 4% gas rewards can quickly offset it.

Does the Costco Card Require Costco Membership?

Yes, having an active paid Costco membership is required to apply and continue using a Costco credit card.

Your standard Costco membership costs $60 a year for a standard Gold Star membership. Higher tiers like Executive offer additional perks for $120/year.

The Costco credit card annual fee matches the regular membership cost. But you must pay both fees separately.

How Does the Costco Card Signup Bonus Work?

The Costco Anywhere Visa offers new applicants a signup bonus opportunity:

  • Earn $70 Costco Shop Card after spending $3,000 on purchases within the first six months

The $70 bonus essentially negates over a year’s worth of the $60 annual fee. You must spend $3,000 within 180 days to earn it.

Note the bonus is a Costco Shop Card, not straight cash back. But the Shop Card functions as money to spend at Costco once redeemed. And you’ll earn 2% back on the initial $3,000 spent working toward the bonus.

Pros of the Costco Credit Card

Here are some of the key advantages of the Costco Visa:

Earn 3% Back on Dining and Travel

The 3% cash back on restaurant and travel purchases makes this card strong for Costco members with typical household expenses.

4% Back on Gas Is Hard to Beat

No other active credit card offers 4% back on gas purchases today. The earning limit is high at $7,000 per year.

Strong Insurance and Shopping Benefits

The built-in benefits like cell phone protection, rental coverage, and extended warranty match premium credit cards.

No Foreign Transaction Fee

Avoiding the typical 3% fee on international purchases saves money if shopping at Costco abroad.

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Simple Cash Back Redemption

Cash back can be redeemed as a statement credit or mailed check starting at just $25 earned.

Credit Card Doubles as Membership Card

Your Costco Visa also acts as your Costco membership card for seamless checkout.

For devoted Costco members, the 4% gas and 2% warehouse rewards add up quickly from routine shopping trips.

Cons of the Costco Credit Card

The Costco Visa does have a few limitations:

Must Pay Costco Membership Fee

You cannot earn rewards with this card without also paying for a Costco Gold Star or Executive membership annually.

Authorized User Fees

Extra user fees beyond one free add-on can limit the card’s appeal for family spending.

Citi-Only ThankYou Points

The rewards sit in your Citi account. Costco does not honor them or track your earned rewards.

Complex Extended Warranty Policy

The extended warranty coverage details involve minimum purchase prices, country restrictions, and other limits.

No Mileage or Travel Transfer Partners

The cashback rewards lack flexibility for hotel stays or airfare. They can only redeem for cash.

If you leave Costco, the card becomes far less useful compared to more flexible travel and cashback cards.

How Does the Costco Card Compare to Other Rewards Credit Cards?

The Costco Visa falls short of premium rewards credit cards in earning potential, but offers decent value aligned specifically to Costco loyalists.

Its 4% gas rewards outmatch flat-rate cashback cards like the Citi® Double Cash (2% back on everything). But the Citi Double Cash has no annual fee to earn rewards anywhere.

For dining and travel, the Costco card earns the same 3% back as the Capital One SavorOne Cash Rewards. But the SavorOne also earns 3% on groceries and entertainment with no Costco membership required.

As a Costco-specific card, its rewards aim squarely at hardcore Costco devotees who prioritize gas, travel discounts, and shopping perks over flexible redemptions.

Should You Use the Costco Card for Non-Costco Purchases?

With a relatively weak 1% return on non-Costco spending, the Costco Visa trails the competition when used beyond Costco.

You’ll maximize value by keeping Costco spending on this card and putting everyday purchases with other merchants on a card like:

  • Citi Double Cash – 2% back on all purchases
  • Citi Custom CashTM – 5% back in a top spend category each billing cycle
  • Chase Freedom Flex – 5% back in quarterly bonus categories
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Use the Costco card solely for its 3-4% bonus categories rather than as an everyday spending card.

Tips for Maximizing the Costco Credit Card

Follow these tips to maximize value from the Costco Visa:

  • Pay with it at Costco gas stations to earn 4% back on fuel purchases
  • Opt into the monthly Costco Shop Card reward certificates to redeem cash back above $50 increments
  • Stack rewards using the card via online cashback portals and apps when shopping
  • Split large Costco purchases into two transactions to double the 2% rewards
  • Use contactless pay options like Apple Pay for quick rewards at checkout
  • Buy high-cost electronics, appliances, and other big-ticket Costco items to maximize 2% rewards
  • Use the 3% restaurants category for Costco food court purchases

Who’s the Costco Credit Card Best For?

The Costco Anywhere Visa® Card makes the most sense for:

  • Regular Costco shoppers and gas station customers
  • Costco Executive members who spend over $3,000 annually there
  • Households needing a card with solid phone, purchase, and travel protections
  • Those who value Costco’s discount travel booking services
  • Anyone holding existing Costco Shop Card balances from executive rewards
  • Frequent restaurant diners and travelers seeking 3% cashback in those categories

You’ll get the best value if you frequently fill up your car and cart at Costco warehouse locations.

Is the Costco Credit Card Worth It?

The Costco Anywhere Visa proves its value and worth for loyal Costco members who routinely shop at warehouses and gas stations.

Between the 4% gas, 2% Costco rewards, and strong built-in benefits, high-spending devotees can easily offset the $60 annual fee and then some.

But for infrequent Costco shoppers, the flat 1% return elsewhere trails cheaper general cashback cards. This card wants to live in every Costco member’s wallet while providing limited appeal elsewhere.

Closing Thoughts on the Costco Visa Card

The Costco Anywhere Visa best rewards those loyal to the Costco brand. Costco die-hards find tremendous consistent value in its 4% gas and 2% warehouse shopping bonuses.

Yet it lacks the flexible redemptions or signup bonuses that provide more opportunity for cardholders less married to shopping at Costco.

Overall, if Costco remains your grocery and gas provider of choice, maximize wallet savings by making its Visa card part of your everyday carry to unlock the biggest rewards from routine Costco spending.

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