Starting in early 2016, you will no longer need an American Express card to pay with a credit card at Costco. Not earth-shattering news (although I do buy a lot of stuff at Costco), but as a credit card geek I thought some of the details that came out were interesting:
- American Express and Costco are ending their 16-year partnership when their current contract ends on March 31, 2016. After that, American Express will no longer be accepted at Costco wholesale stores.
- The relationship accounted for 8% of AmEx’s revenue last year, 20% of its worldwide loans, and 10% of its cards in force. That’s a pretty sizable chunk of their business, but American Express had to offer deeply-discounted transaction fees to get it. I guess they didn’t think it was worth it anymore.
- In Canada, Costco has already dropped AmEx and replaced them with Capital One and Mastercard. Reportedly, Costco is also in talks with CapOne and Mastercard for their US stores as well (though they state they are also talking with other issuers).
- The co-branded Costco TrueEarnings American Express card is expected to be discontinued, and American Express will probably be offering cardholders an alternative card. It really wouldn’t make sense to keep it around if you couldn’t even use it at Costco.
Sources: WSJ, AP, Marketwatch
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So today your options are Amex or pay with cash. With Amex out of the picture, does that mean the only option will be cash? Or are they expected to accept other credit cards?
It says above
“Reportedly, Costco is also in talks with CapOne and Mastercard for their US stores as well (though they state they are also talking with other issuers).”
I’m sure they will partner with another credit card provider before the AmEx contract expires. Costco also accepts debit cards and you can probably still use whatever credit card you like if you buy Costco gift cards first.
Oh, great tip about buying Costco gift cards!
I never thought about that… I should buy Costco giftcards from other places (Safeway for example) to get better cashback and gas points for the purchases. Especially the major ones, like tires
I don’t think you can buy Costco gift cards outside of Costco, but you can buy them at the Costco.com website (even now) with a Visa, MC, or AmEx. Technically if you use a gift card, you don’t even need a membership card.
Guess we can still use amex fir gift cards. That will be a ton on giftcards.
Here is what I found on their website regarding the Costco gift cards. Apparently you have to be a member to purchase the Costco gift card.
“You must be a Costco member to purchase or reload Costco Cash Cards. Members and non-members may use the cash cards to shop at any Costco location in the United States, Canada, Puerto Rico and online at Costco.com or on Costco.ca. Costco Cash balances may be used toward membership or merchandise. “
I hope they are able to maintain or improve upon there 3% and 4% (business) cash back programs with whatever new partner the get.
The Costco I use in Brookfield CT doesn’t accept any credit cards. Only checks.
I’m wondering what will happen to the benefits offered with the Costco Amex card. I presently have the business card and enjoy the 4% rebate on gas and the other bennys. I usually get a check for a couple hundred once a year in addition to the extra rebate from the executive membership. I don’t mind getting a capital one card, but I hope they keep the same rebate structure as well as offer a business card.
@Croce – I was just at my local Costco today to cash my yearly rebate check and the supervisor told me customers will be able to use their cards through March 2016 and that rebates checks will be valid for another year until March 2017 so you don’t “lose” any of your purchasing points from 2016. She also revealed that AmEx wanted to raise their fees so Costco said “no thanks, and adios!” — kind of like what happened with Coke earlier on….and we all know how that eventually turned out for them!
I wouldn’t necessarily trust the Costco supervisor’s information. These discussions and decisions are probably many layers above them… I’m sure the issue was more complicated than AmEx simply raising their fees.
In addition to the end of the co-branding and exclusivity between American Express and Costco by March 2016, the affinity credit card between American Express and JetBlue is also ending by end of 2015.
Darn shame. We spend a good deal on our spg at costco weekly so this will cut down on our points and hurt our status with amex.
Btw, go read comments on regular news sites about this story. What people do not understand about credit, amex and costco is just mindblowing. People really think debit provides same protections, do not realize you can use any amex, etc.
As a Costco warehouse level manager who is mildly in the loop, this has nothing to do with fees and everything to do with rewards percentages. Costco has been pressuring amex to restructure the rewards program ever since the new Sam’s club Mastercard came out. The Sam’s card is 5% gas, 3% dining and travel versus 3/2/2 for Costco Amex. Evidently amex did not come back with an enticing counter and they decided to part ways. Pretty simple stuff.
Jim
If it’s the same as Canada Costco, the following may happen: American Express Canada offered those Canadians with the AmexCostco credit card to switch to the new SimplyCash card with no annual fee. It pays a 1.25% cash back on all purchases but Amex offered intro rate of 5% for the first 6 months on all eligible purchases at gas stations, grocery stores and restaurants, subject to a maximum $250 in cash back on the 5% intro rate. If not, then the account gets closed.
Canada Costco at warehouses accepts only Mastercard. If you want the co-brand credit card, you get the Canadian Capital One Platinum MasterCard; it offers 3% cashback on restaurant purchases, 2% on gas purchases, 0.5% on the first $3,000 spent annually on all other purchases, and 1% after that; no limit on amount earned. Get your cash back in January as a rebate coupon to use at Costco. First 3-months, you’ll earn double cash back until your promotional period expires, or you reach the promotional spend limit within a category.
Would rather eat glass than wait in the god awful gas lines at Costco. 5% or 10% back still = lost time and money. This isn’t the 1970s. Waiting in lines for gas is something my parents did.
Were they waiting in-line because there were no pay-at-the-pump credit card processors? Or, were they paying cash in those years?
The the gas crunch of the 70s doesn’t ring any bells? Google it. Not pleasant. Waiting in gas lines at costco remind me of those days.
https://www.google.com/search?q=google+gas+crunch+70s+lines&safe=off&es_sm=93&biw=1920&bih=965&tbm=isch&tbo=u&source=univ&sa=X&ei=XE7iVLPeA8rxoATV2YGADA&ved=0CFYQsAQ
Brankar, you say ‘Costco Gas Lines’ as if every Costco has gas lines. Mine doesn’t. Most people where I am shop at Wal-Mart and the Costco is lightly trafficked.
So much so that even a quick trip over for gas and lunch is quicker than it would be than to stop at Shell and wait in McDonald’s Drive-Thru.
That said – I am not happy about losing the ability to use my SPG Amex Card there. We have an SPG Amex for all purchases from larger stores and an airline’s Visa for the Mom and Pop shops that don’t accept Amex. Now I need to begin transitioning away from SPG Amex to hopefully just one card for all purchases. Capital One Venture? Citi Prestige?
Lastly, it says ‘Capital One and Mastercard’ for Canada Costco and possibly the US too. Does that mean the only cards that will be accepted with be Capital One cards that are Mastercard labeled or does it mean it will accept ANY Capital One card and ANY Mastercard?
It means any MasterCard. As for whether any CapitalOne card, it’s unclear since CapitalOne Canada only issues MasterCards.
I waited in those 70 lines. In addition you could only buy gas on odd or even days, depending on your license plate. WAY worse than ANY gas line I’ve ever been in at Costco. Never wait more that a few minutes.
The 1970s reference is to the gas lines that formed after a 1973 oil embargo by OPEC against the US due to US support of Israel in the 1973 war vs. Egypt. At the time, OPEC countries supplied about 15% of US oil and the embargo created gas shortages and ‘runs’ on the pumps to fill up, aka, long lines to get gas in the 70s.
Continuing the story…
The impact this to the US energy security and therefore overall security changed US foreign policy for decades. Since their national interests were being impacted by turmoil in the region, they decided to become much more involved in maintaining stability. Look at US involvement in middle east history since 1973 to see the indirect impact this has had long term.
These days, the US only imports 10% of their oil imports from OPEC states, and specifically from Saudi Arabia, one of the US’s strongest allies in the region. Some have therefore asked, does the US need to be so involved in the region if our energy security is no longer tightly aligned to regional stability?
Reference: http://www.npr.org/blogs/parallels/2013/10/15/234771573/the-1973-arab-oil-embargo-the-old-rules-no-longer-apply
I’m a member of Costco & also use the Amex card quite a bit so I’m curious how all this will play out in the future.
I’m also curious how someone without a membership & only Costco gift card could enter and shop at the store? Before I enter the store I must show my membership card & before the cashier begins my order she/he scans my membership card. Will they allow customers to check out without being a member?
Thanks in advance!!
The policy is that non-members can shop with a Costco cash card, however any remaining balance is to be cashed out.
Thanks JimmyC!
I literally signed up for the Costco AMEX a few hours before this announcement. I hadn’t signed up a new card in over 5 years but was persuaded into applying. My main concern is the AMEX Annual Fee; What will happen to that annual fee when Costco and AMEX split ways?! Has anyone heard what will happen with the Annual AMEX Card Fee? I will be very upset if that fee gets passed onto Costco members when they stop accepting AMEX. I don’t want to have to cancel the card to avoid the annual fee either as I’m very conscience about my credit score.
In Canada, AmEx offered to replace the Costco card with another AmEx with no annual fee (SimplyCash). I don’t know, but expect them to do something similar in the US.
So does that mean my current amex credit card, limit, and annual fee will cease to exist? Or will the replacement card/limit be in addition to the amex. I’m sorry I’m not that financially savvy i just don’t understand how the amex and annual fee will just disappear because of a partnership ending.. My understanding is that the contract was between me and amex (and between amex and costco).. Just because Costco gives me a new card with no annual fee how does that erase the line of credit and associated fees as long as the costco amex account is still active ….
Nevermind. I’m an idiot. I get what you’re saying. Fingers crossed they do the right thing.
It has been announced today March 2, 2915!!! Costco will be accepting Visa credit cards in April 1, 2016 at their warehouses. what’s unannounced, is that we can still use today any Amex, Mastercard, Visa, or Discover credit cards online to buy Costco gift cards to be used at the warehouses.
Also, Costco has partnered with Citibank to offer a co-branded credit card. I can only hope there will be a decent bonus or incentive for us to apply for a Citi-Costco credit card, or at least give us 2% back on purchases?
where was it announced? I havene’t seen anything.
Costco Anywhere Visa Card by Citi and/or Costco Anywhere Visa Business Card will start to be sent out to current AMEX Costco cardholders sometime in May 2016; and the old AMEX Costco credit card will no longer work on June 20, 2016. The new Citi Costco Visa credit card appears to be better: briefly, 4% back on worlwide gas (but not gas from convenience stores like 7-11, WaWa; grocery stores gas; Sams Club or BJ’s); 3% back on restaurants/ dining/ fastfood, travel..hotel, airfare, car rental, travel agencies, cruise lines; 2% back at Costco warehouse and costco.com; 1% back everything else. Details are at citi.com/credit-cards/creditcards/citi.action?ID=costco-terms# and in the WSJ. You cannot apply yet; probably have to wait for all card details closer to sometime in June 2016!