A Costco credit card is one of the best credit cards when it comes to rewards. It can be described as an upgrade of the Amex Costco card. Consumers upgrading to the new Costco Credit Card have nothing to worry about. The new version outperforms its predecessor across all categories.
What is The Citi Costco Credit Card?
The Costco card from Citi is an improvement of the American Express version. For starters, consumers are offered 4% cash back on gas. This works as long as they use $7,000 or less for the year.
Features and Pricing
There is a 1% cash back on every purchase, 2% on Costco purchases, and 3% back on travel and at restaurants. It, therefore, produces better returns than the majority of credit cards. For example, the 4% rate on gas makes it a leader in credit card gas purchases. The travel rewards make it compete with leading travel credit cards. On the downside, you have fewer opportunities to maximize the rewards since it does not award miles.
How it Compares
We took the time to select similar cards to see how the card compares to others in the market. The ones picked were:
- Capital One Quicksilver
- Chase Freedom Unlimited
- Bank of America Cash Rewards
Citi Costco Visa
The Citi Costco Visa card provides a great rewards scheme. One of its best features is 4% cash back on gas purchases. It applies to most gas station purchases. However, it does not work for large bulk retailers and convenience stores.
Take note the rate is capped at $7,000 of gas a year. After $7,000, the rate is 1%. This is still generous when compared to other credit cards. Additionally, you can earn cash back of $280 on gas purchases after maxing out the gas category.
A 3% cash back is offered on dining and travel. Frequent travelers may opt to use travel rewards card to gain rewards. The downside of using other cards is the lack of cash back on restaurant purchases.
Purchases made through Costco.com and in-store at Costco earn you an unlimited 2% cash back. If you are comfortable purchasing at Costco, this is the card for you. You can easily generate more than 2% cash back on your Costco card. Other cards offer 2% or less. With proper planning, you can beat the cash-back rate on other cards when you use the Citi Costco card.
Great Rewards In the Long Run
Unfortunately, the Citi Costco Visa card does not have a sign-up bonus. If you plan on bagging a sign-up bonus, you need to look for an alternative. On the other hand, it is the card of choice for those who wish to earn the highest cash-back rates. Keep in mind the rewards rate surpass the advantage of a sign-up bonus.
No Fee... With Annual Fees
Technically, you are not charged an annual fee for using the card. The catch is you need to pay a membership fee. Members are charged a $60 annual fee. Current members might not find this fee to be an inconvenience. New members, on the other hand, may need to factor in the fee when looking at the perks and downsides of the card.
Stringent Rewards Program
One of the disadvantages of the Costco Visa Credit card is the inflexibility of redemption options. Cash-Back is available in the form of a certificate. This is despite the requirement for members to maintain their loyalty every year if they wish to claim their rewards. Certificates have to be presented to Costco to pay for merchandise or for cash at the register.
You can cancel your membership at any time you please. If you do so before February, you will forfeit all your rewards for the previous year. Each certificate has a short shelf life. For instance, you forfeit your rewards if you do not redeem by the end of the year.
The card becomes less valuable to people who do not want to maintain Costco membership. It does not make sense for people who want other rewards redeeming options. It may also not be favorable for individuals who want programs with flexible deadlines.
Pros & Cons Box
What We Compared it With
Capital One Quicksilver
Consumers who need a credit card to maximize rewards on credit card spending should consider Capital One Quicksilver. It is a simple and hassle-free card. The rate offered is 1.5% pure cash back rate. It is almost 50% higher than average credit cards in the market.
The card is recommended as an excellent option for those who need an everyday card that is straightforward. Users do not need to scheme, plot, or keep track of quarterly sign-ups and categories. There are no limits on cash rewards.
Cash rewards turn up quickly. The advantage is they are accessible the moment charges or transactions are cleared on the card. Capital One Quicksilver cardholders get simplicity and lose on maximizing rewards.
Bonus And Promotions
$150 is the cash bonus. You do not need to spend thousands to get the bonus. All you need to do is spend $500 within the first 90 days. Without a limit on purchases, you can spend this money on anything you want and get the bonus.
Most credit cards offer a standard 1% cash back reward. Additionally, the cash back is not limited to specific purchases. This means you can make 1.5% cash back on any purchase of your choice. Very few cards, including the Costco credit card, have this offer.
The rewards redemption process of Capital One Quicksilver is unique. You can choose to a request for a gift card, check, or account credit. Account credits are the best option. They apply to your balance faster than the other methods.
Checks will generally take the longest to redeem. The process is prolonged due to the factors involved in processing, issuing and mailing checks. Your redemption method will not affect the value of your cash-back. You will always get the same value irrespective of the method you choose to redeem.
All rewards are shown as a dollar value to allow you to deploy according to your preferences. You have the opportunity of setting up automatic redemptions. Once set up, the cash back will be applied according to your requirements. This is done by logging into their portal and setting up your redemption preferences.
Chase Freedom Unlimited
The Chase Freedom Unlimited offers a flat cash-back rate of 1.5% on all purchases. Redemption options are more than a check in the mail or statement credits. You have the option of redeeming rewards by booking travel of the same value directly through Chase. Alternatively, you may use other Chase cards with higher redemption options to transfer your rewards.
Other cards such as the Costco credit card do not offer a wide range of redemption options. The Chase Freedom Unlimited is leading when it comes to versatility. Finding a card that matches the Freedom Unlimited is a challenge.Unlike the Costco credit card, Freedom Unlimited charges foreign transaction fees. Capital One Quicksilver may be a better option for those who travel a lot. It does not require you to pay 3% extra fee for all purchases made outside the United States. Just like Freedom Unlimited, Capital One Quicksilver offers 1.5% unlimited cash back on all purchases.
No Redemption Minimum
There is no limit on the amount of cash back you can redeem. You can redeem as low as 1 cent. Citi Double Cash Card has a minimum of $25. Chase Freedom's minimum is $20. This means Freedom Unlimited cardholders can redeem every cent of their cash back when they need it.
0% APR And High Sign-up Bonus
Freedom Unlimited comes with a 0% introductory APR on balance transfers and purchases for 15 months. Afterward, there is an ongoing variable APR ranging from 16.74% to 25.49%. The sign-up bonus is high at $150.
Foreign Transaction Fees
Pros & Cons
Bank of America Cash Rewards
Cash Rewards credit card from Bank of America is designed to earn you cash back from purchases you make often. 2% cash back is earned at wholesale clubs and grocery stores. For gas, you get 3% cash back. This card is a competitor of any Costco credit card. If you spend a lot on groceries and gas, it is maybe the right card for you.
You get a sign-up bonus of $150 when you spend $500 within the first 90 days. People with Bank of America accounts have an extra incentive to get the card. It gives them a minimum of 10% cash back bonus if they redeem into an eligible account.The shopping portal gives you a "coin" for every redemption on a deal. When you earn four coins, you get a cash reward. This makes Bank of America cards better than any Costco credit card. Take note offers you can access from BankAmerideals will vary with your location. The good news is that offers include many restaurants all around the country.
Bank of America Cash Rewards offers 1% to 3.3% cash back. The rate is determined by purchases made and how the cash back is redeemed. Some members can earn cash back of up to 5.25%. They have to be preferred members with $100k in the bank.
As a cardholder, you get 3% cash back on all gas purchases. 2% cash back is earned at wholesale clubs and grocery stores. All other purchases will give you 1% cash back. When you spend $500 in the first three months, you get a $150 sign-up bonus. Shopping at select retailers through BankAmerideals earns the user 5% to a 10% cash back or more.
BankAmerideals Shopping Portal
A small selection of retailers work with BankAmerideals shopping portal to offer discounts. The range is usually 5% or 10% off. These discounts do not affect the cash back you would get from a purchase.
Pros & Cons
Costco credit cards are the best option for those who spend more than $500 on gas in a month. It is also great for people who travel and eat out a lot. If these are not your strong points, it is better to stick to a simpler option like Capital One Quicksilver. Additionally, Costco cards are only redeemable once a year.
Bank of America Cash Rewards cards is the best competitor to Costco cards. It offers the highest cash-back rates when compared to other cards. Additionally, it has a sign-up bonus which is not seen with Citi Costco cards. Lastly, BankAmerideals shopping portal has offers you may find nowhere else.
When you are planning on getting a credit card, make sure you consider the pros and cons of each. A Costco card is great for people who use a lot of gas. It is also great for travelers due to the lack of foreign transaction fees. The redemption options and qualification for the card may be a downside to some. Make sure you do due diligence on similar cards before you decide.