Costco Credit Card: Perks, Benefits, & Drawbacks

Bulk shoppers and deal-seekers often flock to discount wholesaler Costco for some of the best savings on everyday staples. If you’re already a loyal Costco member, then you’ve likely heard about the Costco Anywhere Visa® Card by Citi. 

This card offers savings across a number of everyday spending categories, but rewards a modest 2% cash back on your Costco purchases. And strict limits on your redemptions can hold back the value of this card. Here’s what you need to know before you apply:

Perks and Benefits of the Costco Credit Card

The Costco Anywhere Visa Card offers solid cash back options for cardholders:

• 4% on eligible gas (including gas at Costco) for the first $7,000 per year, then 1%
• 3% on restaurants and travel purchases worldwide
• 2% on purchases from Costco and Costco.com
• 1% on all other purchases

Unlike some retail cards, you can use the Costco Anywhere Visa wherever Visa cards are accepted, and earn rewards across categories not limited to the retailer. 

The top-earning rewards category is gas, so if you don’t drive frequently this may not be the best option for you. Three percent cash back at restaurants and on travel is pretty good, but if you’re looking for a card purely for dining and travel rewards, you can find higher rewards percentages elsewhere. 

READ MORE: Best Rewards Credit Cards, Best Travel Credit Cards

You must be a Costco member to qualify for this card. And if you already pay for Costco membership, it’s likely you save enough money buying in bulk at the retailer to make your membership fee worth it. If that’s the case, then just the 2% rewards at Costco alone — for no added price beyond your existing membership —  can make this card worth it. 

There’s no annual fee (with your paid Costco membership), no foreign transaction fees, and a variable 15.24% APR. 

Earning Rewards with Costco Credit Card

To earn rewards with your Costco credit card, simply swipe the card when making purchases in the qualifying categories. The cash back you earn will be provided as an annual credit card reward certificate. 

The real downside to this card is that you can only redeem your cash back rewards at Costco, in one single transaction per year. You’ll get a rewards certificate for your full previous calendar year rewards balance each February when your billing statement closes, which is redeemable through Dec. 31 of that year. You can redeem the certificate at a Costco Warehouse toward a single purchase or get cash from the store, but those are your only options. 

Is the Costco Credit Card Right for You?

If you do a lot of your shopping at Costco, then this card can help you save. Just make sure you pay close attention to all of the redemption rules so that you can actually reap the rewards you earn. 

For someone who spends a lot at Costco, one redemption per year might not be a hindrance. For instance, if you like to stock up at the wholesale club only a few times each year, you can easily put those rewards toward your next haul. And Costco does offer high-value items that you could save up your annual rewards for: new tires, jewelry, appliances, and more. 

But if you don’t want to sit on your cash rewards all year, or want more redemption options, then there may be better cards out there. This is especially true if you’re considering the Costco card solely for its 2% cash back rate at Costco — the right cash back credit card can offer the same rewards with more redemption flexibility. The Citi® Double Cash Card, for example, offers up to 2% cash back on every purchase you make (including at Costco), and the Chase Freedom Unlimited® offers a flat 1.5% cash back on every purchase, in addition to higher rewards in specific categories.

Alternatives to the Costco Credit Card for Wholesale Club Savings

The Costco credit card is not the only option available for earning cash back at the retailer. There are a few cards that offer cash back savings at wholesale clubs, including Costco. 

The Bank of America Cash Rewards Credit Card

The Bank of America® Cash Rewards credit card offers 3% cash back in a category of your choice (up to $2,500 in combined choice category/grocery store/wholesale club quarterly purchases), 2% cash back at grocery stores and wholesale clubs (up to $2,500 in combined choice category/grocery store/wholesale club quarterly purchases), and 1% unlimited on all other purchases. If you spent up to the $2,500 limit solely at Costco each quarter, you could earn $200 in annual savings.

Discover it Cash Back or Discover it Student Cash Back

Discover it® Cash Back and Discover it® Student Cash Back cardholders can take advantage of Discover’s quarterly rotating 5% cash back categories (on up to $1,500 in purchases each quarter, then 1%). One of the current 5% cash back categories is wholesale clubs (for April-June). You can earn as much as $75 cash back within that 5% category this quarter, in addition to what you earn throughout the rest of the year. 

Chase Freedom Flex

The Chase Freedom Flex℠ card offers rotating 5% cash back bonus categories. The first quarter of 2020 and 2021 both included wholesale clubs. Like Discover’s rotating cash back card, you won’t earn rewards at Costco every quarter. However, the category is typically included one quarter each year (up to the same $1,500 limit), and the 5% rewards rate can be extremely valuable when it does come around. 

Costco Membership

Again, you must have a Costco Membership to get the Costco Anywhere Visa Card. There are two tiers:

With the Gold Star Executive membership, you’ll be able to receive an annual 2% reward certificate based on your annual spending on eligible purchases, up to $1,000. This is in addition to any rewards you’d earn with the Costco Anywhere Visa Card and can only be used toward a purchase in-store, not redeemed for cash.