The Best Credit Cards for Costco Purchases
Costco is one of the most popular retailers for Americans due to their incredible pricing on thousands of items for your home. Costco is unique among its competitors in that they only accept cash, debit cards, and Visa cards. Yes, since its 2016 switch from American Express, in order to use a credit card at Costco you need a Visa. Below are our picks on the best Visa cards to use for Costco purchases.
Costco Anywhere Visa® Card by Citi
The Costco Anywhere Visa® Card by Citi is naturally a good choice for Costco shoppers due to its cashback benefits and no annual fee (so long as you have a Costco membership.) You'll earn:
- 4% cashback on gas, including at Costco gas stations, up to the first $7,000 per year. After that, the cashback goes down to 1%.
- 3% cashback on restaurants and travel.
- 2% cashback on all Costco warehouse purchases.
- 1% cashback on everything else.
I'd say that this card is the absolute best card for Costco gas. There are a number of credit cards for gas purchases that offer 5% cashback, but those exclude warehouse gas pumps (see one exception below.) For my family, we pair a Costco Executive Membership to extend our cash back at Costco by a further 2% (your breakeven for this is $3,000 a year, but if you fall short, Costco will honor a pro-rated discount!)
All cash back on this card is awarded in the form of a certificate after your February statement closes, which is good at any Costco worldwide or redeemed for cash in person at a Costco member services desk.
The Chase Freedom Unlimited card is easy to understand: 1.5% cashback on every purchase. One reason why I may pick this card over the Costco Anywhere card is the return on your Costco spending in the first year of holding the Freedom Unlimited Card. You'll receive $200 back when you spend $500 on the card within the first three months of card membership, which would count on your Costco purchases.
So, say you spend $2,000 at Costco each year. You'll earn $40 cash back from the Costco Card. If you spend that same amount on the Freedom Unlimited card in the first year of holding the card, you'd earn $30 in cashback, plus an additional $200 from the sign up bonus. Essentially, using the Freedom Unlimited card for Costo purchases for your first year could put an extra $230 in your pocket. You could also potentially extend your return by converting cash back to Ultimate Rewards points if you have a card earning that currency, like the Chase Sapphire Preferred.
The Chase Freedom Card offers 5% cashback on a rotating list of merchants, which change quarterly. We've seen in past years that Q1 usually includes gas stations, and this card does include Costco Gas. You can only earn 5% back on the first $1,500 in combined purchases in the categories each quarter, so you'd max out at $75 cashback if you bought $1,500 worth of gas at Costco.
While Q2 2020 features grocery stores on its list of categories that qualify for 5% cash back, warehouse stores like Costco are excluded.
The Chase Sapphire Preferred card won't get you any bonuses on Costco purchases, but you do earn one Ultimate Rewards point per dollar, which we value at two cents per point. So, that's like 2% back on your Costco purchases, so long as you redeem them at Ultimate Rewards travel transfer partners, like British Airways, United, and more. I've used the points to travel all over the world, so I can definitely see the value of earning these points.
Other Cards That May Work For Your Family
The Fidelity Rewards Visa Signature Card and PenFed Power Cash Rewards Card both offer 2% cashback and no annual fee, but do require a qualified account open to qualify for the cards. The Bank of America Cash Rewards credit card offers 2% cashback at warehouse stores, up to $2,500 each year. The Capital One Venture Rewards card offers 2% cashback unlimited but has a $95 annual fee, waived for the first year. Finally, the Wells Fargo Cash Wise Visa® Card offers 1.5% cashback on every purchase, with no annual fee.