The Costco Credit Card is Not as Advantageous as You Might Think

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Costco credit card: The CIBC Mastercard from Costco offers great discounts when you buy gas there… but not for your other expenses at the warehouse club.

Accumulate dollars when you use your credit card: that’s what cash-back cards allow. These cards provide rewards based on the categories of businesses where you shop; for example, if the card gives 3% back on groceries, you will accumulate it every time you go to the supermarket, even if you alternate between Provigo, Metro, IGA and most other establishments of the same type.

As we explain in our article on the best cash-back cards, choosing a card that matches your spending habits is the most effective way to rack up rewards. Costco fans take note: if your credit card offers a great discount on groceries, you won’t take advantage of this great rate when shopping at the warehouse club.

Indeed, as the latter is not considered a grocery store, purchases made there often only give a discount rate between 0.5 and 1.5%. Knowing this, is getting the CIBC Costco Mastercard credit card  beneficial? Let’s take a closer look.

Table of Contents

CIBC Costco Mastercard Overview

Annual fee: $0 for main card and up to three additional cards
Interest rate (purchases): 19.75%
Minimum personal income: $15,000
Estimated annual rewards: $438 (if you spend $2,500 per month )
No welcome bonus; the discounts are therefore the same every year.

For comparison, monthly expenses are distributed as in our article on the best cards, except for gasoline (we considered here that the user always stocked up at Costco):

  • groceries ($500); gas at Costco ($375)
  • gasoline elsewhere ($0)
  • purchases on the website ($0)
  • meal ($200)
  • bills ($375)
  • travel ($175); and other expenses, including purchases made at Costco warehouses ($875). 

If that doesn’t match your spending, use the Costco card calculator.

Rewards per dollar of purchases

  • Gas: 3% at Costco or 2% elsewhere for the first $5,000, then 1
  • • Restaurants: 3%
  • • Purchases on the website: 2% for the first $8,000, then 1%
  • • Purchases in Costco warehouses: 1%
  • • Purchases elsewhere: 1%

Protections included
• Travel insurance: none
• Extended warranty on products purchased with the card (it extends by one year that is offered by the manufacturer)
• Purchase insurance (covers for 90 days the breakage or theft of the goods)
• Mobile device insurance (up to $1,000 for up to two years after purchase)

Analysis of the rewards offered

The 3% cash back rate offered by the CIBC Costco Mastercard at Costco gas stations and restaurants is quite good although it is not an uncommon rate. As for the 2% rate for other gas stations and the website it compares to the rate of several other cards. 

What is disappointing however is that if you are one of the faithful who shops at the warehouse club every week you will be thanked with a banal rate of 1%.

As is the case with many credit cards the terms and conditions written in the fine print reveal an important element: the 2% and 3% discounts linked to gasoline only concern the first $5,000 spent at a gas station which represents $96 per week. 

At $1.75 per liter of gasoline, there is a way to reach this amount quickly. Beyond this cap, the percentage drops to a modest 1% which corresponds to the minimum offered by many cards. As for the 2% discount linked to the website, the terms are more interesting, because it is possible to spend up to $8,000 before the rate drops to 1%.

Other interesting cards for gasoline

Other cards give a similar return for gasoline however they are not “better” because they also come with caps and many have annual fees from the second year. In return they come with attractive benefits (such as travel insurance) and above all the discount percentage is valid no matter where you fill up. Some examples:

• CIBC Visa Infinite Dividends: 4% on gas (free the 1st year, then $120 per year)
• BMO Cash Back World Elite Mastercard : 3% on gas (free the 1st year, then $120 $ per year)
• CIBC Visa Platinum Dividends : 3% on gas (free for the first year, then $99 per year)

Please note: if you opt for a Visa card, you will also have to carry a Mastercard in your wallet, because Costco does not accept Visa cards. In short, there is no easy solution.

Costco Credit Card Benefits

• Attractive gas discounts at Costco and restaurants.
• No annual fees including the second year.
• No fees for up to three additional cards.
• Accessible to people with low income.
• Serves as a membership card which is useful for people who tend to misplace it.
• Can be used anywhere other than Costco.

Disadvantages of the Costco Credit Card

• Requires Costco membership (starting at $60 per year).
• Discount rate for purchases at Costco warehouses is no better than shopping elsewhere.
• Annual cap on gasoline (the equivalent of $96 per week) that can be reached quickly.
• No travel insurance, unlike many other cards.
• No promotional rate (or “welcome bonus”) for new members.
• Need to wait until January to use the previous year’s discounts.
• Rebates to be used in Costco warehouses (official policy, although in practice, if the check is used in the warehouse and the amount of purchases is less than the check, the difference is refunded in cash).

Advantageous, but only if…

The CIBC Costco Mastercard is beneficial if you plan to spend $5,000 or less annually at Costco gas stations and $8,000 or less on the warehouse club website. As long as you spend above the cap amounts or fill up your gas tank somewhere other than Costco, it offers a regular cashback rate.

If you fill up at Costco because it’s convenient and the gas costs less there, the card gives a decent return overall.

Where the “balloon” deflates is if you believe that by shopping in Costco warehouses, you will get particularly advantageous discounts. The ordinary rate of 1% that you will be offered is the same as if you shop elsewhere, which is rather disappointing.

Check if the Costco credit card is best for you by using Protegez-Vous’s credit card comparator. This tool will help you find the ones that will allow you to accumulate maximum rewards, whether you’re a loyal Costco customer… or not.

Read also: The Best Cash Back Credit Cards

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