The days of the American Express Costco credit card are coming to an end.
American Express said last year its exclusive partnership with Costco would end in 2016.
Costco is now partnering with Citigroup, and shoppers can expect to get their new Visa co-branded cards – called Costco Anywhere cards – in May and early June. The new cards double as membership cards.
June 20 marks the date the warehouse club officially switches over from American Express to the new Visa cards, Citigroup said.
Here are things to know about the upcoming changeover:
- What do customers need to do to make the switch? Not much. Existing Costco members don’t need to apply for the new Costco Anywhere Visa card, which they will automatically receive in the mail. Members should keep using their American Express Costco cards through June 19 and then destroy them, Citigroup said. As of June 20 – when the new Visa cards start working – American Express Costco cards will automatically be canceled and won’t work at any stores.
Citigroup said it will have more information for customers who are interested in becoming Costco members on applying for the card in June.
- How do the rewards stack up? Costco members can earn 4 percent cash back on up to $7,000 spent on gas, as well as 3 percent on restaurants and eligible travel, 2 percent on Costco purchases and 1 percent on everything else. The card doesn’t have an annual fee but shoppers will need to pay for a $55 annual Costco membership.
The American Express cards provided 3 percent cash back on gas up to $4,000 per year, 2 percent on restaurants and eligible travel and 1 percent on other purchases.
That makes the Visa card a “no-brainer” for existing members, but also one of the better cash back cards on the market that could be enticing for people who aren’t currently Costco shoppers, said Sean McQuay, credit card expert for Nerdwallet. McQuay worked for Visa while it was negotiating with Costco but said he wasn’t directly involved in the project.
According to McQuay, no card offers better cash back rates on gas, restaurants and travel, but customers who see the biggest chunk of their credit card bill going to groceries may get more cash back with a different card.
Why the increased perks? Costco cardholders tend to be relatively affluent, use their credit cards frequently and make large purchases, making them desirable customers for a credit card company, McQuay said.
“It’s safe to say Visa wanted to win this deal a lot,” he said.
- Do customers need the new card to shop at Costco? Costco members will be able to use any Visa card to shop at Costco after June 20 and don’t have to get the Costco Anywhere Visa card. However, only the Costco Anywhere card will offer the cash back rewards described above.
- Will getting a new card affect customers’ credit scores? No – Citigroup said it will not pull a credit report when transferring customers’ accounts.
- What happens to rewards customers earned with American Express Costco cards? Customers won’t lose cash back rewards earned on Costco American Express cards up to June 20 – they’ll move to the new Visa cards, as will any outstanding balances, Citigroup said. Other American Express membership benefits won’t transfer to the new cards, American Express said.
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