Best card to use at Costco

[Anonymous]

One obvious choice is the CITI Costco Visa card, which pays 2% back at Costco (and is a Visa, which some of the other 2% cards are not). 

I found a better way though, and thought I would post about it. This depends on a few things though:

IF you can be a Bank of America preferred rewards customer THEN the BoA Cash Rewads visa or Travel Rewards card are better than 2% at Costco in the warehouse, and the Cash Rewards is better than 4% at the gas pump--meaning the Cash Rewards is better across the board at Costco than the CITI Costco card is. 

There are two catches here:

First, you need to be a BoA preferred rewards customer. Otherwise the Travel rewards card is only 1.5% cash back, and the Cash Rewards card is only 2% back--not better than the CITI Costco Visa. To be a preferred rewards customer you need to move some savings to Merrill Edge and maintain greater than a 50k balance there to get an extra 50% back, or greater than 100k balance to get an extra 75% back. You can move a 401k or IRA or regular brokerage account to get there, which is what I did. And note -- I don't actually trade in that account! I actually just moved some Vanguard ETFs and they will sit there being Vanguard ETF's reinvesting dividends until I retire. So no fees or high fee mutual funds, I just moved some savings I was already planning to hold for a few decades there, and I will just keep holding it. I'm still putting in new money elsewhere (Vanguard).

Second, you may notice that the BoA Cash Rewards visa is actually a Master Card and so won't be accepted at Costco. That's true. However you can get it in a variety of other "affinity" versions, and many of them are actually branded as a Visa card. You can go to a BoA branch and browse through the choices until you find one you like -- there's a World Wildlife Foundation card, for example, I went with Rotary International since my wife is active in Rotary. Pick an affinity card--the great thing is the affinity group is going to get a bit of money when you open the account, and also earn money when you spend on it--a very small amount, but not zero! So that's on top of the rewards you earn, so it's great anyway.

So IF you are a Preferred Rewards customer (move your 401k/IRA/etc to Merrill Edge) AND you get a Visa network version of the Cash Rewards card through the affinity program, then this is what you get:

-- 20k-50k in M.E.: 2.5% back in warehouse, 3% back at the pump (at the pump CITI is still better)

-- 50-100k in ME: 3% back in warehouse , 4.5% back at the pump (now beats the CITI across the board)

-- 100k+ in ME: 3.5% back in warehouse, 5.25% back at the pump (much better than CITI)

(Also the travel rewards card goes from being 1.5% back everywhere to being 1.875%, 2.25%, or 2.625% depending on your rewards tier, so it becomes a good daily driver, better than Citi Double Cash, if you have >50k there.)

Thought I'd share!

[Anonymous]

Or, save yourself all that hassle and just pick up an Alliant Visa 3% back first year and 2.5 after that.

[Anonymous]

Is that actually less hassle? You have to drive $50k/year through that card, which in the long run only pays 2.5% back.

That's less back than the 2.62% you can get back across the board with the BoA travel card + preferred rewards, and at Costco specifically it's less than the 3.5% back you'll earn at the warehouse and 5% back at the pump. And if you can afford to drive $50k/yr through a credit card you should certainly have $100k in an investment account that you can park with Merrill Edge.

It seems that very many people will eventually have >$100k in savings for retirement, while not very many people will drive $50k/yr in credit card spending, so the BoA preferred rewards program seems more attainable to most than the Alliant card. 

Though if you do have $50k/yr in spending, 2.5%, while not quite as good as what BoA pays, is respectable.

[Anonymous]

Plus there is a 10% customer bonus if cash back is deposited into BofA account. 

[wasCB14]

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@Anonymous wrote:

Plus there is a 10% customer bonus if cash back is deposited into BofA account. 

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The 10% is replaced by the Preferred Rewards program. They don't stack.

[Anonymous]

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@Anonymous wrote:

Is that actually less hassle? You have to drive $50k/year through that card, which in the long run only pays 2.5% back.

That's less back than the 2.62% you can get back across the board with the BoA travel card + preferred rewards, and at Costco specifically it's less than the 3.5% back you'll earn at the warehouse and 5% back at the pump. And if you can afford to drive $50k/yr through a credit card you should certainly have $100k in an investment account that you can park with Merrill Edge.

It seems that very many people will eventually have >$100k in savings for retirement, while not very many people will drive $50k/yr in credit card spending, so the BoA preferred rewards program seems more attainable to most than the Alliant card. 

Though if you do have $50k/yr in spending, 2.5%, while not quite as good as what BoA pays, is respectable.

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Not sure what you mean by "have" to drive 50 K through the card? I have the card, and it does not have this requirement.  It is slightly less than 2.62 after first year, but this is a very minute difference.  

My brokerages are with Vanguard and Charles Schwab (for their platinum MR conversion).  I might do the Merril Edge thing when the bonus is back at 1K, but that would be the primary reason I do it -- not for the credit card reward.  However I prefer index funds to ETFs.  If I'm going to go through all these hoops for credit card rewards I much prefer to just churn which provides a much higher ROI than trying to squeeze out an extra 0.01% out of a cash back card.

[CreditCuriosity]

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@Anonymous wrote:

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@Anonymous wrote:

Is that actually less hassle? You have to drive $50k/year through that card, which in the long run only pays 2.5% back.

That's less back than the 2.62% you can get back across the board with the BoA travel card + preferred rewards, and at Costco specifically it's less than the 3.5% back you'll earn at the warehouse and 5% back at the pump. And if you can afford to drive $50k/yr through a credit card you should certainly have $100k in an investment account that you can park with Merrill Edge.

It seems that very many people will eventually have >$100k in savings for retirement, while not very many people will drive $50k/yr in credit card spending, so the BoA preferred rewards program seems more attainable to most than the Alliant card. 

Though if you do have $50k/yr in spending, 2.5%, while not quite as good as what BoA pays, is respectable.

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Not sure what you mean by "have" to drive 50 K through the card? I have the card, and it does not have this requirement.  It is slightly less than 2.62, but this is a very minute difference.  

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They are reffering to offset the AF and the difference I would assume without pulling out my calculator

[Anonymous]

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@CreditCuriosity wrote:

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@AnonymousThey are reffering to offset the AF and the difference I would assume without pulling out my calculator

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The AF offset (which is free first year) is nowhere close to that.  The break even is 12 K in spending vs a 2% cash back card.

[wasCB14]

I'm not sure how Costco gas codes...warehouse (2x), gas (3x), or other (1x).

Cash Rewards' bonus categories (grocery, wholesale, gas) have a cumulative $2,500 quarterly cap. Many Costco shoppers exceed that.

2.625% via Travel or Premium would be nice, and I've considered it. Ultimately I went with BBP for off-category spend and just accepted a lower return at Costco.

A reasonable share of my Costco spend is on electronics...a purchase category where it's good to have both (easy) price protection and a good extended warranty.

So I'm sticking with the Citi Costco card.

[Anonymous]

On the Alliant page for the card it says it is exclusively for people who spend $50k per year on their credit card. Is that just a statement that is not enforced? What do they mean by that? Would they look for evidence of that volume of spending it close accounts that don't come close to that?