Costco Card (American Express)

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Costco gives you choices

Aug 19, 2002 (Updated Jun 1, 2006)
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Rated a Very Helpful Review
  • User Rating: Excellent

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Pros:Only credit card you can get that's good at Costco

Cons:Some cards are better in some area. All features must be considered to tell.

The Bottom Line: If you shop at Costco regularly and you pay your bills on time, this is the card for you.


American Express Platinum Cash Rebate Card

Note: The following was written when there was only one American Express card for Costco. See the update below for more current information.

American Express is a good card to have. You get good service, and it has good benefits. If you are a Costco customer, there are no other cards you can currently get that are accepted there.

This is a rebate card, and as with most rebate cards, you get a rebate at a selected merchant. Since you really have no other credit card choice at Costco, pointing out the relative benefits at Costco is not very meaningful. The benefits at other merchants are less than for competing rewards card, so I limited my use of this card to Costco.

I always pay my bills in full each month, so interest rates had not been an issue for me. I also have linked all my credit cards to my bank account so they can be paid automatically when due. Unfortunately, and for reasons that American Express could not explain, they do not offer this option for the Costco card. It is easier to miss a payment or two by a few days and get hit with substantial fees that more than offset the benefits of the rewards.

One could say that it would be my fault for mailing my payments late, but it's standard these days for credit card companies to allow me to automate this. Their lack of willingness to offer this feature made it the wrong card for me and I dropped it.

If you are diligent in paying your bills by hand (see update below), and you are willing to accept that if a payment is slow getting to them that it is your responsibility, then this may be the card for you. Personally, I'd rather not have to worry about mailing checks.

Update:

Since the time of my initial review, Costco has introduced the TrueEarnings American Express Card. If you are considering a card to use at Costco, or are considering an American Express card in general, the TrueEarnings card is probably a much better deal than the Platinum Cash Rebate Card. It leaves out few of the features of the original card, and the rebate structure is different, but will probably benefit most users. If you have the original Costco American Express Platinum Cash Rebate Card, you may want to consider an upgrade.

Costco accepts American Express as its only credit card. The advantage of the original card was that it gave a cash rebate, but the rebate was tiered. The new card gives a one percent cash back bonus at Costco, and on most eligible purchases. However, travel expenses earn a 2% rebate, and restaurants expenses earn a 3% rebate. The old card gave back .25% on the first $2000, .5% on the next $3000, and 1.5% on amounts above that, if you paid in full each month. So if you charged $2000 per year, you got a $5 rebate. The rebate went up by .5% for those who carry a balance, but that's not really cash back so much as a factor to be considered in conjunction with the interest rate, which is more than .5% higher than some other cards.

Assuming that you don't use the card at restaurants or for travel, you would have to charge $11,000 per year on the old card to break even with the 1% rebate on the new card. The break even point is even higher if you would use the new card for restaurants and travel, and would depend on your spending habits. For example, if you eat out at restaurants twice a month on average, and spend $50 for an average meal, then the break even point would be $15,800. For some users, the original card may be a better deal. But considering the extent to which American Express is accepted, and considering the rebates on other types of cards, it may not be the best option to use American Express for some purchases.

Another advantage of a consistent rebate level for each purchase type is that you don't have to guess whether the card will be a good deal given what your future purchases may be. With the old card, you earn a mere $5 for the first $2000 or usage, and $15 for the next $3000 of usage in anticipation of making up for it later on.

According to the card holder agreement for the new card, "Rebates are awarded every February in the form of an in-store coupon redeemable for cash or merchandise at any U.S. Costco warehouse." This assumes that the account is in good standing and there is at least $1 in rebates available. The original card's rebate worked in a similar, if not identical way. Since you have a choice of redeeming the rebate for cash, you should do so, unless the rebate is small or you carry a balance. If you are planning to buy merchandise, use your American Express card, and save the cash for when your bill comes. That way, you get a rebate on that purchase too.

These days, there are plenty of rewards cards out there. Some are tiered, and some have dollar limits on rewards. For example, Chase and Citibank both have cards that give 5% back on gasoline, groceries, and pharmacy purchases. But those cards, which also give 1% back on other eligible purchases, limit the rebate to $300 per year. If you use them for nothing but purchases that qualify for 5% rebates, you would lose rebates once you reach $6000 per year in purchases. With gasoline at over $3 per gallon, it's not hard to hit $125 per week on groceries and filling up two cars with gas. The Costco card, on the other hand, does not stop the rebate when you reach a maximum amount. So using the Costco card for most purchases, except those where another card gives a better deal, might be a good strategy.

For all the cards mentioned, the categories for rebates go by how the merchant is classified, not by what you buy. So if you go to Target and buy some cookies and fill a prescription, it won't count as groceries or pharmacy. But if the mini mart at the local gas station has a set of luggage on its shelves, you'll get 5% off with the Citibank or Chase cards if you buy it, so long as it's rung up at the same register where you pay for gas.

Since my original review, American Express has added website capability to schedule payments see statements and other account activity, and it's possible to get email alerts before a payment is due, when you are getting close to your credit limit (within a dollar amount you define) or if there's irregular activity. So it's easier to avoid missing payments by mistake. Although the website says nothing about an option for automatic full monthly payments, I was told by another American Express card holder that he was able to get this when requested by phone. Since not all American Express cards are the same, check with American Express if you need this feature.

American Express offers many cards. Since Costco will accept any American Express card, and since the rebate is no higher at Costco than anywhere else, it may pay to look at other American Express cards. In general, American Express cards offer features that are not standard on other cards. However, it's not a safe assumption that this card has the same features as another American Express card.

These cards offer Fraud Protection. You don't pay for unauthorized charges, and there's no $50 exception. You also get a plan that extends original warranties by up to a year, and a plan that provides coverage against theft and damage. They have a fairly standard rental car loss and damage policy so you can waive the CDW when you rent. You do NOT get the return protection plan that is standard with many American Express cards. If a merchant won't take something back, this card won't do anything more for you than most other cards.

The original card also gave you fee free traveler's checks, but the feature expired. It gives discounts on international cell phone rentals, and gives free travel accident insurance. It also mentions emergency card replacement as a benefit, while the new one merely says that you can call the same phone number for unparalleled customer service. I'm not sure what that means. If I get unparalleled service, but I don't get the same level of service as with the other card, then I suppose that they are not parallel. But the word usually implies superiority, although technically, horrible service could be considered unparalleled if nobody else is so horrible.

With any card, check the terms and conditions on the application or at the company's website. Sometimes, there are hidden fees that you did not expect, even on cards with "Absolutely no fees of any kind."

There is no fee for either card, and additional cards are free. But you have to get additional cards at Costco, and they will only give them to Costco card holders on your Costco account. Since the basic Costco fee covers a card and a spouse card, it effectively means that you don't necessarily get additional cards for free.


Recommend this product? Yes

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