Best Credit Card For Costco Purchases
A question we often see in the ToP Facebook Group is what is the best credit card for Costco purchases? It seems like something that would be easy to answer , doesn't it? There should be plenty of great choices, just like there is for gas and grocery purchases etc. Costco doesn't play the easy game though. At least not when it comes to which credit cards are best for purchases in store. That is because they have their own unique credit card rules, which adds a layer of complication / complexity that seems to baffle people a bit. Because of that I wanted to put together a quick guide breaking down the best cards for your next trip to Costco.
Credit Card Rules At Costco
Before we get into what the best credit card(s) for Costco purchases are, we should go over the unique rules that Costco has about paying with a credit card. Many warehouse stores limit which credit cards they accept in store because of negotiated contracts they have, and Costco is no different. Costco even has different rules for which credit cards works inside the store vs when you shop on their website.
- In-Store Purchases
- Credit cards on the Visa network only
- Online Purchases
- Credit cards on the Visa and Mastercard network only
This means that Discover and American Express are not options whether you are shopping online or in-store.
Best Credit Cards For Costco Purchases
Even though Mastercard and Visa are by far the largest payment networks, losing Amex and Discover limits our options a bit. The Capital One and Discover merger is only going to lessen the potential pot even more because Capital One plans to go fully on the Discover network in the future. Having said that, I still have quite a few good options to share with you. One of which (at the end) may surprise you some, and it could be the best option for a lot of people.
Getting A Mastercard To Work In Store (Or Potentially Other Cards)
Before we dive into which cards work best for Costco purchases, I wanted to share a tip that can give you a few more options. As you see above, credit cards on the Mastercard network work for online Costco purchases. That is great and all, but what if you want to purchase stuff in store? We shared the workaround for that a while ago, at least when it comes to the Chase Freedom Flex card. That tip is to purchase a Costco cash card online with your Mastercard, and then use the Costco gift card in store for your purchases. That opens up all Mastercard credit cards to you, at least with some prior planning.
A recent change made this option even better. According to reddit user FrenchFryExpert you can load Costco cash cards into your Costco app and store them in there now. That makes it a lot easier for tracking and to make sure you use everything on your cash cards.
As far as the “other cards,” any gift cards that run on the Visa network should work in store as well. If you purchase the gift card with a card that earns a multiplier then it could be worth the extra step. Just make sure to factor in the activation fee you get charged when buying the gift card (if there is no promo waiving / discounting the fee). That could eat into the value you are getting by going this route.
Any Visa Or Mastercard With A Welcome Offer
The absolute best option is always going to be a Visa or Mastercard credit card that you have a welcome offer attached to. If you have minimum spend left then this is always going to be your answer. That is because the the rate earned per dollar is going to be well above anything you can get from an everyday spend credit card. When you are working on a welcome offer you are getting 10x, 15x or even 20x earning on those purchases. It is impossible to beat that level of return. This is always the top answer for which card questions for pretty much everything!
Rotating Category Card
Next up we have our rotating category cards. These are cards where you earn 5x / 5% on select categories each quarter, usually on up to $1500 in spend. Think the Chase Freedom Flex (or OG Freedom) or Citi Custom Cash cards. Getting 5x on your purchase is about as good as you can do outside of using a credit card with a welcome offer attached. Even if they are on the Mastercard network, you now have a workaround for that now. If it is nearing the end of the quarter, and you have spending cap left, you may want to stock up on Costco gift cards to use in future months. That would lock in 5x earning for some future purchases too.
Venmo Visa
The Venmo Visa card is a little under the radar, but can be a mainstay when it comes to credit card purchases at Costco. The Venmo card earns 3% in your top spending category each month. Wouldn't you know it, those potential categories just happen to include warehouses. While it isn't worth a 5/24 spot, it can be one worth looking into if you spend enough at Costco once you go over. The cool thing is that warehouses are lumped in with the grocery category, so you can hit both areas of big spend with the same card.
Altitude Reserve
For a good long while the US Bank Altitude Reserve was the best everyday option for Costco. Unfortunately, it is no longer available for new sign ups. If you happen to already have it in your wallet then it is still a great option. The card gives 3x earning when using a mobile wallet to pay for your Costco purchases. I rank this lower than the Venmo Visa since there is no longer available and the annual fee is on the higher end ($400 with a $325 annual travel credit).
The other US Bank card to look at would be the US Bank Shopper Cash Rewards card that earns 3% back on $1,500 in spend per quarter at warehouses. It does come with a $95 annual fee after the first year though.
Bank Of America Cards (With Platinum Honors)
Next up is a Bank of America card that earns 1.5% on everything. That doesn't sound exciting, unless you have Platinum Honors status with BOA at least. Earning Platinum Honors requires a hefty amount of money deposited with Bank of America, or invested with Merrill Lynch, so this option won't work for most. If you do have that set up you can get 2.625% back on everything, thanks to the 75% earnings bump you get from Platinum Honors status.
If you grab the Bank of America Custom Cash card you may be able to do even better with online purchases. That should increase the earning rate to 5.25% with Platinum Honors.
Any 2x Earner Will Do The Job
If none of these options work, then look at your credit card lineup for a 2x on everything earner. Something like one of these will do the trick:
All of these earn points that can be moved to transfer partners, which makes them a little better than a standard 2% cash back card. The DoubleCash will require you to hold a Strata Premier too in order to get the best transfer rates though.
What About A Debit Card?
Did I save the best credit card for Costco purchases workaround for last? Just to ensure you read all the way through? Maybe… Costco is picky about which credit cards you can use in store, but they are a bit more lenient when it comes to debit cards. Most any kind of debit card will work. In walks the PayPal Debit Card.
The PayPal Debit card earns 5% on your selected category each month. The upside is that Costco and Sam's Club just so happen to code as grocery with this card too (warehouse is not a direct option). The downside is the 5% earning is limited to $1000 in spend each month, or $50 in cash back. You would also need to load the money to your account before using the card, since it isn't a credit card, but it also won't require a hard pull or take up a 5/24 spot to sign up for. Just remember to set a calendar reminder to pick grocery as your category each month.
Best Credit Card For Costco Purchases: ToP Thoughts
Is the best credit card for Costco purchases not a credit card at all? It probably is on a daily basis. At least when you don't have a credit card with welcome offer spend still available. Outside of that, I would maximize the 5x earning rotating category cards every time it is a quarterly option. When either of those two options are not available I would be swiping the PayPal Debit card for my first $1000 in Costco charges every month.
Let me know which credit card you use for your Costco purchases over in the ToP Facebook Group.
