Costco Will Switch From Amex To Visa On June 20, 2016

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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.

Wondering which Visa to use at Costco?

We like the Chase Freedom for 5% back on purchases at warehouse stores this year!

Then in early March we found out the reason for this — American Express is selling their portfolio of Costco cardmembers to Citi in a billion dollar deal, meaning those with the Costco Amex will have their card converted into a Costco Visa in 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.

Official Costco transition date from Amex to Citi

We now have information from Costco as to the timing of the transition from American Express to Citi:

  • American Express cards will be accepted at Costco stores through June 19, 2016
  • Starting June 20, 2016, only Visa credit cards will be accepted at Costco stores
  • Cardholders should receive account information from Citibank starting in April 2016, and will be mailed their new Citi Visa Costco cards in May or early June 2016
  • Rewards earned through the Costco American Express will transfer to the Costco Citi Visa
  • There will be no credit pull as part of the transfer process, and cardholders will maintain their credit line

While the process has been drawn out, overall I think American Express and Citi are doing a pretty good job with the transition. That’s especially true when you factor in that initially Costco American Express cards weren’t going to be converted into Costco Citi cards, but they found a way to make it mutually beneficial, which is good for consumers.

If you just want to keep using your Costco card for everyday spend, you don’t have to do anything. Meanwhile check out my previous post if you’re looking for a new American Express card to replace your current Costco card.

Best credit card for Costco spend?

I do wish Costco accepted all Citi cards, rather than just call Visa cards. I find that a bit puzzling, since it’s Citi which bought the portfolio, and not Visa. In other words, you’ll be able to use the Chase Sapphire Preferred® Card at Costco stores, but not the Citi Prestige® Card or Citi ThankYou® Premier Card (since they’re issued as MasterCards).

Chances are that the best card for Costco spend will be the new Chase Freedom Unlimited, which will offer 1.5x points per dollar spent (which can be converted into Ultimate Rewards points in conjunction with the Chase Sapphire Preferred® Card or Ink Plus® Business Credit Card).

I still can’t rationalize that whole setup, given that so many Citi cards are MasterCards and not Visas.

Bottom line

American Express cards will no longer be accepted at Costco as of June 20, 2016. If you have a Costco Amex card, there’s nothing you need to do — you’ll automatically receive a Costco Citi Visa card in the mail, and your credit line and rewards points will automatically be transferred.

(Tip of the hat to View from the Wing)

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Comments

  1. Buy cash cards online use them in store. No need to wait until June and you can use MasterCard too.

  2. “Buy cash cards online use them in store” using the Citi AT&T Access More card at 3x TY points might be the best option.

  3. The reason it’s all Visa cards accepted and not all citi cards is that visa has the merchant relationship with Costco. Citi has the credit card deal with Costco, but it’s ultimately the card network that determines acceptance. The Amex deal rolled up both together, which is why any Amex card – even those issued by other banks (including citi – I still have a citi Amex card!) are currently accepted at Costco. What’s interesting is the citi-visa relationship. Clearly they had to work closely together to pull off the deal.

  4. Does this mean that there is no need to transfer my Costco Amex points to an airline now or open up another Amex product? Thanks for the info.

  5. Thanks for the update! Just to clarify a minor point: Amex sold the portfolio to Citi, not Costco. In “American Express is selling their portfolio of Costco cardmembers to Costco,” the second Costco needs to be changed to Citi.

  6. I’m sure that Citi would love to limit card acceptance to Citibank cards, but under visa rules they can’t.

    I’m wondering if I should cancel my costco amex and then reapply under citibank to earn whatever bonus they’ll be offering.

  7. Assuming the cash rebate amounts remain the same, members purchasing gasoline from Costco will be better off using the Costco Visa, which will give a 3% cash rebate.

  8. Will applying for another Amex now keep my credit history length with Amex the same?

    I’ve been a member since 1980 and need to keep that rolling.

  9. so which Citi Visa card has the best sign up bonus?…any 100k bonuses out there?

    and Lucky…there’s a thread you started on the A380 BA F that you’ve kind of abandoned…can you please reply to the questions posed there too!

    many thanks

  10. Truly a shame. I spend over $10K a year using a corporate Amex card and now that business will go elsewhere simply because Costco will stop accepting American Express.

    I predict Costco will start accepting it again within 6 months after falling revenues from business customers forced to spend their Amex dollars elsewhere. They’ll use this to renegotiate their discount rate from Amex.

  11. As I said before Citi is missing something on this transaction. I see many Costco members becoming an Amex customer since I believe most of Costco customers did not have a Amex card. Now, I am pretty sure almost every single Costco member has a Visa card. It could be from a Gap to Macys, etc… but they have a Visa. Thus, there is no incentive in my opinion for them to apply for a Costco Citi Visa. Thus, I still don’t understand what Citi will gain with this if they don’t start issuing other Citi cards with the Visa brand. I am a Costco member and will not apply for the Costco Citi Visa and will be using a Chase card to shop there.

  12. @Bob Jensen

    I think most Costco members are more loyal to Costco and not to AMEX. During the re-negotiation, AMEX was unwilling to continue to give such high rebate discount to Costco members; hence the decision for Costco to switch to a different CC network. If Costco had continued with AMEX, Costco Member would receive a reduced discount rate from AMEX, which will undoubtedly make its members like you very angry.

    @Santastico

    If the terms remains the same, only way you can get 3% (or 4% for business members) rebate on Costco gas is the Costco Citi Visa – unless your existing Visa card already has an excellent gas rebate.

    If the same Visa credit card also gives 1% cash back on all Costco purchases (+2% rebate from Costco Executive Members or +3% for business members), then yes there is no reason for you to get a Costco Citi Visa.

    But then again, this is assuming that the rebate terms will remain the same.

  13. @chyang888
    Actually AmEx actually started cutting some of the rebate benefits from the start since their partnership began. Before, either the Travel or the Dining categories gave a 3% cash back bonus, while the business card had an 5% cash back bonus, which got dropped to 4%.

    @Santastico
    As mentioned by chyang888, there are benefits to the Citi card that is not matched by other Visa cards, also, by purchasing the entire portfolio from Amex, they don’t have to get members to actively sign-up for the new cards, they will just be issued new ones by Citi, and also, their Costco Membership card is included as well on the card. The convenience of having all the necessary information on one card will be a great convenience for Costco members and considering the usual rewards cards from other banks don’t provide bonus spending at Costco, the intangible benefits of rewards over true cash-back and the convenience of just bringing one card out of your wallet at check-out will probably result in a reasonably high percentage of costco shoppers just using the Costco Visa.

  14. I already have (2) visa cards and do not want the citi card – how do I stop it getting sent to me.?

  15. I have a Costco credit card which I have had since BEFORE American Express came along. Never did get the AmEx card. The Costco card is currently thru Capital One. Wonder if they will still accept this card? I don’t think there are many of us left with this card.

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