Best Costco Amex Replacement

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As we’ve known since early last year, Costco is replacing American Express with Citi for their exclusive credit card agreement. With Citi taking over the contract, all Visa cards will eventually be accepted at Costco stores.

Citi was supposed to be taking over the Costco contract from American Express on April 1, though in early February we learned that would be delayed, and that American Express cards would continue to be accepted at Costco stores until at least June.

About a week ago we found out the reason for this — American Express is selling their portfolio of Costco cardmembers to Costco in a billion dollar deal, meaning those with the Costco Amex will have their card converted into a Costco Visa at some point over the coming months. This will make the transition easier for cardmembers, since those who want to continue to have a Costco credit card won’t have to apply for a new one.

In the Ask Lucky forum, reader Fredd noted he received a letter from American Express about replacing his Costco Amex card:

We expect that you will no longer be able to use your current American Express® Card for any purchases beginning in mid-2016 because it will be discontinued. You can keep using your Card and earning rewards as you do today until the end of the Card program. Please visit americanexpress.com/programupdate to learn about what may happen to your card account at the end of the partnership. If you would like to still have an American Express Card when the program ends, take advantage of this special offer to apply for the Blue Cash Everyday® Card.

American Express Bank, FSB invites you to apply for the no annual fee Blue Cash Everyday® Card, issued by our affiliate American Express Centurion Bank. You can get cash back on your everyday purchases, including 3% Cash Back at US Supermarkets on up to $6,000 per year in purchases. Terms and limitations apply.

Get more on everyday spending:

  • 3% Cash Back at U.S. supermarkets on up to $6,000 per year in purchases
  • 2% Cash Back at U.S. gas stations
  • 2% Cash Back at select U.S. department stores
  • 1% Cash Back on other purchases

Plus, experience all the benefits of Card Membership with no annual fee.

Fredd asks if this is the best card to move to post-Costco, or if there’s another card he should be considering. This is a situation many people are in, so I figured I’d address it in this post.

What’s interesting about Amex’s Costco approach

What’s interesting here is that American Express is simply inviting you to apply for another Amex card. The Amex Costco cards should convert into Citi Visa Costco cards at some point in a few months (you shouldn’t have to apply again), so I don’t think Amex can convert these Costco cards into other Amex products.

What Amex is doing here is inviting people to apply for a new card. American Express’ suggestion of applying for the Blue Cash Everyday® Card, is just that — a suggestion. However, in connection with the Costco situation, there’s no benefit to applying for it over any other credit card.

The reason they’re recommending it is probably because the rewards structure most closely matches that of the Costco American Express. The Costco American Express offers:

  • 3% cash back at U.S. stand-alone gas stations and on gasoline at Costco (up to $4,000 per year), then 1%
  • 2% cash back at U.S. restaurants and on eligible travel purchases, including at Costco
  • 1% cash back on other purchases, including at Costco

Meanwhile the Blue Cash Everyday® Card offers the following:

  • 3% at U.S. supermarkets on up to $6,000 per year in purchases
  • 2% at U.S. gas stations & select U.S. dept stores
  • 1% cash back on other purchases

Grocery-apples
Earn bonus points at grocery stores with the above cards!

The rewards structure doesn’t exactly match, but I think the point is that they’re both no annual fee cash back cards, which is why they’re assuming this will be a popular card for people to switch to.

With that in mind, I figured I’d share my thoughts on six general types of credit cards to consider if you’re looking for a replacement to your Costco American Express. The great news is that there are plenty of great credit cards out there, which should meet just about any consumer profile:

If you want cashback without an annual fee…

If you just want a simple cashback card with no annual fee, the Citi® Double Cash Card offers 1% cashback when you make your purchase, and another 1% cashback when you pay for your purchase. That’s the equivalent of 2% cashback. Getting 2% cashback with no annual fee and no strings attached is pretty tough to beat.

Citi-DoubleCash

If you want a higher return Amex cashback card…

American Express is suggesting you switch to the Blue Cash Everyday® Card. But if you’re someone who spends a lot at supermarkets and on gas, you might want to consider the premium version of this card, the Blue Cash Preferred® Card from American Express. It has a $95 annual fee ($75 if your application is received by 8/3/16), and offers the following return on spend:

  • 6% at U.S. supermarkets on up to $6,000 per year in purchases
  • 3% at U.S. gas stations & select U.S. dept stores
  • 1% cash back on other purchases

If you spend $6,000 per year at supermarkets, that means you’d earn $360 cashback at supermarkets alone, which more than justifies the annual fee.

If you want an Amex which earns points…

While a lot of people like the simplicity of cashback (for good reason), there’s also a lot of value to be had with points-based cards. One of the most compelling no annual fee Amex cards is the Amex EveryDay® Credit Card, This card offers:

  • 2x points at U.S. stand-alone supermarkets (up to $6,000 per year), then 1x points
  • 1x point on other purchases
  • A 20% points bonus when you use your card at least 20 times in a billing period

In other words, you’re earning 2.4x points at supermarkets and 1.2x points on other purchases, assuming you have 20 transactions per month. That’s pretty awesome for a no annual fee card.

These are points you can transfer to airline partners, including Singapore Airlines. Just to given an example, you can redeem as few as 57,375 Membership Rewards points for a ticket in Singapore Airlines Suites Class from New York to Frankfurt. Not a bad reward for your everyday spend!

Singapore-Suites-Double-Bed
Who wouldn’t want to fly to Europe in this bed?

If you want an Amex which earns more points…

If you like the concept of earning points rather than cashback, consider the premium version of the Amex EveryDay® Credit Card — the Amex EveryDay® Preferred Credit Card. This card will really super charge your points earnings. On this card you earn:

  • 3x points at U.S. stand-alone supermarkets (up to $6,000 per year), then 1x points
  • 2x points at U.S. stand-alone gas stations
  • 1x point on other purchases
  • A 50% points bonus when you use your card at least 20 times in a billing period

That means you’ll be earning up to 4.5x points at supermarkets, up to 3x points at gas stations, and up to 1.5x points on everyday spend. That’s a huge return.

If you want a huge bonus for applying for a card

The Costco American Express didn’t offer a sign-up bonus when it was being issued, though all of the above cards do offer some sort of bonuses. If you want a big bonus, consider applying for the  Starwood Preferred Guest® Credit Card from American Express or Starwood Preferred Guest® Business Credit Card from American Express.

I value the Starpoints earned on the card at ~2.2 cents each, so to me that’s a bonus of ~$600 just for getting the card and completing the minimum spend, which is huge. You’l have to spend a lot of time spending on other cards to earn that much value.

Other points earning cards to consider

If the reason you had an American Express card was because of their relationship with Costco, you’re no longer limited to their cards. Consider another card which offers big sign-up bonuses and great returns on everyday spend for the categories in which you spend the most. For example:

Gas-Station
Earn 3x points on gas purchases with the Citi ThankYou Premier Card!

Bottom line

The card which is best for you really depends on how much you spend, which categories you spend most in, and what kind of rewards you’re after. The Costco switchover from American Express to Citi is leaving a lot of people confused, so hopefully the above gives a good outline of all the possible directions you could go with your credit card spend, from a simple 2% cashback card like the Citi® Double Cash Card, to a card which offers huge bonus points in many categories, like the Citi ThankYou® Premier Card.

So if you’re still shopping at Costco you can keep using your American Express cards for a few months, at which point they’ll be converted into Citi Visa cards. Hopefully the switchover will leave some people inspired to get new and more rewarding credit cards.


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Comments

  1. I think you missed part of the point. It’s not just about finding a new AMEX card to use. The only reason I had an AMEX card at all was to use it at Costco. Now that they’re switching to Citi VISA, what’s the best VISA card to get so I can still buy things at Costco? That way I can still use a credit card at Costco and earn points for something.

  2. So, Costco has accepted only Amex cards in the past, and (evidently) will accept only Visa cards in the future. I wonder if they will emulate Sam’s Club, which in the last couple of weeks has switched from MC-only to accepting any credit card.

  3. I asked here couple times but still nobody was able to address my question. You show on the picture above that you can earn 3x points with Citi Premier on gas purchases. I know that Costo Gas would qualify for that BUT my Citi Premier is a Mastercard and not accepted at Costco. When I called Citi and asked to have it replaced by a Visa I was told that 95% of their cards are Mastercard and there was no way to get a Citi Premier with the Visa brand. If that is true that card is useless at Costco. Thoughts on how to get it with Visa brand?

  4. My first AMEX card was for shopping at Costco when I was in college circa 2000. If only I had learned about this game back then instead of just a few years ago…

  5. @ Santastico — Unfortunately at this point I don’t think there’s a way to have it issued as a Visa.

  6. @ Miles — I doubt it, given how the nature of their exclusive credit card agreements, and how lucrative they are. The reason they’re paying next to nothing in merchant fees, and also making tons on their co-brand business, is because of the exclusive nature of the partnership.

  7. @lucky: So, what are your thoughts on this deal between Citi and Costco? If it is true that 95% of Citi cards are Mastercard and the deal with Costco is with Visa, that means that unless you apply for a Citi Costco Visa card people will use Chase Visas at Costco. I understand that most Costco members would never have an Amex card unless they applied for the Costco Amex but everyone have a Visa. Am I missing something here? What is Citi really getting from this deal?

  8. I find it really strange how Amex would send out emails to their customers with Lucky’s affiliate links in the message.

    Woulda thought for sure they’d put in TPG’s affiliate link.

  9. @ Larry — Good point, and sorry if I wasn’t clear in the purpose of this post. Was trying to address the email Amex was sending out, and share whether signing up for that card was indeed a good deal. Plan on doing a similar post for Costco purchases when they switch to Visa, but before I do so, I’d like to see the benefits of the Costco Visa Card, which I don’t believe have been published yet. Without knowing the details of the card, it’s tough to say what will be a better option.

  10. @ Santastico — That’s a great question, and one of the reasons I’m reserving judgment on the Citi side of things until the deal is fully into place. I could see them accepting Citi MasterCards, for the reasons you state. It just doesn’t make sense to me that they’d accept Visas not issued by Citi, but wouldn’t accept MasterCards issued by Citi. Hopefully we get more info soon, but I’m in agreement.

  11. Second (the joys of losing half one’s post when using a “device”), is there any reason to keep an Amex simply for the sake of having an Amex?

    Any advantages to Amex I can’t think of?

  12. @lucky: I don’t think Costco would be able to not accept Visa cards that were not issued by Citi. First I am not sure they have the technology to do that and second that would be a huge issue with existing customers which would basically force them to apply for a Citi card. I always used my SPG Amex at Costco and was never asked to apply for their Amex card. As for them accepting Citi Mastercard it would not make any sense since the deal was announced as being a Citi/Visa deal. As you said, we have to wait and see but this is very weird. Still this weekend at my local Costco there were many signs of their Amex card for people to apply.

  13. Good news

    \\http://pointscentric.com/2016/03/06/psa-the-50k-signup-bonus-on-both-citibank-american-airlines-cards-are-still-available/

    This blogger says citi aa links are still available and bloggers stopped peddling the card because they don’t get affiliate commission anymore.

    Maybe you can apply for those

  14. my length of credit history is pretty long with this card.

    i’m assuming that the length of history will get zeroed out when changeover occurs, right?

  15. What a bizarre post. Guy asks which card to replace a Costco card and you recommend two Mastercards and seven Amex cards. Only the CSP is usable at Costco… Are you having TPG interns guest write for you now?

  16. Kind if disingenuous of AmEx to claim that the $100 statement credit is considered a “special offer” when it is pretty much the generic public offer. I think I was able to find a $200 statement credit one randomly pop up once while browsing on AmEx’s website, but didn’t jump on it in time and it disappeared.

    BlueCash doesn’t do much for me since I don’t shop at grocery or department stores much, but it actually would be a big deal for my wife. Coincidentally, she has a Business Costco Card, so AmEx offered her the SimplyCash Business Card with the possibility of 3% back on travel (which would beat my current Delta Platnium Card) or restaurants, both of which we could use and would help a lot. Of course it is a matter of calculating whether I spend more on airfare annually, or restaurants.

  17. As the deadline approaches for the end of the costco amex card, they have been offering me better and better offers to stick with amex. The latest is Blue Cash Everyday Card. $250 cash back with a $1000 spend and up to $200 back for charging US wireless providers. (10% back up to $200 on every bill till the end of the year. This card has no annual fee. Also 3% on supermarkets, 2% on gas and some stores.

    Should I take it or wait for an even better, more desperate offer?

    I realize, there is nothing in this one for you, but if you do have the link, I will be glad to help out.

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