Costco started accepting Visa this week. Costco American Express cardholders received the replacement Costco Visa card from Citi.
I don’t have the Costco American Express card. Nor do I have the new Costco Anywhere Visa card by Citi.
Back when Costco only accepted American Express cards, you could use any American Express card, not just the the Costco AmEx card. In fact the Costco AmEx card wasn’t the best American Express card to use at Costco. The Fidelity AmEx card was, because you could get 2% rewards instead of just 1% from the Costco AmEx card.
Now that Costco switched to Visa, you are able to use any Visa card, not just the new Costco Visa by Citi. As I predicted in my previous post Anatomy Of A Co-Branded Credit Card, it still remains that the best Visa card to use at Costco isn’t the Costco Visa.
You will get 2% rewards from the new Citi Costco Visa for purchases at Costco, which is better than the 1% rewards from the old Costco AmEx. Several Visa cards match it at 2%, including
Citi’s own Double Cash Visa Capital One’s Spark Cash for Business and the new Fidelity Visa by Elan. Several other cards actually beat it by quite a bit.
The Bank of America Travel Rewards Visa with Preferred Rewards program at the 75% bonus tier pays 2.625% rewards on every purchase, whether at Costco or not. That’s a good 30% more than the new Costco Visa, without having to worry about which card to use where. Just use the same card everywhere.
The grandfathered Priceline Rewards Visa pays 3.33% on every purchase if you redeem the rewards against Priceline Name Your Own Price or Express Deals purchases. You get 2/3 more in rewards, although you must already use Priceline’s Name Your Own Price or Express Deals often enough to redeem your points at the higher rate. You also must already have a grandfathered Priceline Rewards Visa card because the current cards aren’t as good.
It gets better. The Bank of America Cash Rewards Card pays 2% on wholesale club purchases. At the 75% bonus tier in the Preferred Rewards program, it pays 3.5% rewards on Costco purchases. That’s 75% more than the Citi Costo Visa pays.
You get to the 75% bonus tier under Bank of America’s Preferred Rewards program when you have a Bank of America checking account and you hold say $100k in ETFs at Merrill Edge. Holding $100k in ETFs at Merrill Edge costs you nothing. You actually get a welcome bonus and monthly free trades. At the 75% bonus tier, the Bank of America checking account is also free, with no minimum balance or direct deposit requirement.
The rewards from the Bank of America card can be automatically deposited to your Bank of America checking account whenever you reach a threshold. You don’t have to wait until the end of the year. There’s a cap for $2,500 per quarter in combined grocery/wholesale club/gas purchases each quarter. At my spending level, I expect to come well under that cap.
Coincidentally, Chase Freedom card put wholesale clubs into its 5% rewards categories through the end of 2016. In the next several months, up to $1,500 in purchases in the special categories per quarter, using Chase Freedom at Costco will get you 2-1/2 times the rewards as using the new Costco Visa.
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Sam Seattle says
What a timely post, Harry. Thanks for reminding us about the Price line Rewards visa and about the free monthly trades at Merrill. I love your blog.
Using a combo of BoA Travel, BoA Cash Rewards, Amazon Prime Store Card, & Amex Simply Cash Business, I was able to average just a hair under 4% cash back via statement credits on all non-mortgage spend, including daycare and property taxes to the tune of $5000 with no hastle and without dealing with rotating categories.
I totally get that a higher % can be achieved by churning, chasing bonuses, and redeeming for travel, but for me this encourages extra travel spending and is just not yet worth the hastle until the kids get older.
Mike, how old are your kids? I’ve traveled with mine (aged 5 and 18 months at the time) and it was quite an experience. We took the 5 year old on other trips when she was younger and she doesn’t remember a single one of them, but we do. What I am saying, no reason to wait!
Fidelity uses to have a Visa and an Amex, now it transfer to only one Visa by Elan? what will happen to Fidelity Amex? confused.
There’s 2 different Visas for Fidelity Elan. One with 2% back, one with 1.5%.
If you had the fidelity Amex you get a 2% elan visa. If you had the fidelity visa (by fia) you get a 1.5% elan visa. If you had both you get two different replacement cards, one each of the different rewards. Once you receive your cards you can call elan customer service and get them combined (if you got two) or upgraded (if you only got a 1.5%).
1) Do you use the BOA or grandfathered priceline for your spending?
I have the grandfathered priceline, but haven’t really investigated if it makes sense to use it instead of the BOA and currently do all my spending on the BOA except one recurring monthly item to ensure the priceline stays alive. I would not book hotels on priceline, but have and could book flights through priceline (I currently tend to do my flights on BOA travel site for the extra cashback on them or orbitz for the orbitz bucks but could change if it made sense) if the cashback applies to flights –
2) Does the cashback apply to flights?
Harry Sit says
I use the B of A card most of the time. I use the grandfathered Priceline card only after I book a Express Deals hotel through Priceline so that I know for sure there’s a target for the points. If you don’t use Priceline’s Name Your Own Price or Express Deals I don’t think it’s worth the switch. The higher redemption rate is only on Name Your Own Price or Express Deals bookings, not regular airline bookings. I don’t know if flights can be booked with Name Your Own Price.
Great post. Banks are battling to win top of wallet status with Costco customers.
One clarification: Citi Double Cash is a MasterCard card and CANNOT be used at Costco stores. Visa has exclusive acceptance.
Harry Sit says
Good catch on the Citi Double Cash. Edited.
I am going to stick with my Fidelity Elan Visa’s 2% everywhere. Assuming you spend $15k per year, an extra 75% rewards is only $225 per year. Not nothing but it seems like a small rock.
I agree. However the Costco visa still may be worth getting for gas everywhere including costco (4%), and dining/travel (3%). That being said freedom gives 5% this quarter on restaurants. The worst place to use the Costco visa is everywhere other than that including Costco.
Not many want to move 100k of ETFs from Vanguard to Bank of America to squeeze out an extra ~$200-400 per year in CC rewards (myself included). Its much simpler to go after another CC bonus and get more than that.
“However the Costco visa still may be worth getting for gas everywhere including costco (4%)”
Not exactly everywhere – You will only earn 1% cash back, not 4%, for gas purchased at superstores, supermarkets, convenience stores and warehouse clubs other than Costco or for fuel used for non-automobile purposes. The original AMEX Blue Cash card added a similar restriction a number of years ago – making it less desirable as well.
In my area, getting gas is often at a Supermarket Station or Quicky-mart that might be lumped under a “convenience” store – earning just 1% – not 4%.
We like Costco – but I think the “new” Fidelity 2% Visa is still the best card these days, it has way less restrictions and automatically puts money into an account designed for savings, instead of a yearly coupon that one might be tempted to buy more stuff at Costco (rather than asking to cash it).
John Ferol says
How do you use another VISA (not CITIBanj) card at the gas pump?
Harry Sit says
Put in your Costco membership card first.