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Information about the cards in this article has changed. The BankAmericard Cash Rewards™ credit card is now a Mastercard, and is no longer accepted at Costco. (Costco only accepts Visa.) The bonus categories on the Chase Freedom® have also changed. See our Chase Freedom® review for the latest offers on this card.
The Chase Freedom® is now the best credit card to use at Costco through the end of 2016 — even better than the brand-new Costco Anywhere Visa® Card by Citi. And customers of other wholesale clubs, including Sam's Club and BJ's, are getting a sweet deal, too.
Chase announced this week that Chase Freedom® cardholders can earn 5% cash back on wholesale club purchases through the end of 2016. Previously, wholesale clubs were a 5% category only in the second quarter, which ends June 30.
“The Chase Freedom® is offering 2.5 times more rewards at wholesale clubs than the next best options,” says Sean McQuay, NerdWallet’s credit cards expert. He notes that runners-up like the BankAmericard Cash Rewards™ credit card offer only a 2% rewards rate on these purchases, at most. “Some cards offer rewards as high as 6% cash back for grocery stores — but those benefits never apply to wholesale retailers like Costco or Sam’s Club,” McQuay adds.
The previously announced Chase Freedom® bonus categories for the rest of 2016 remain in effect: restaurants in the third quarter and holiday shopping in the fourth quarter. A $1,500-per-quarter cap applies to combined purchases in all bonus categories. Once you hit the cap, further purchases earn only 1%.
Current bonus categories:
Chase Freedom® bonus rewards categories for 2020
Q1 (Jan. 1 - March 31)
• Gas stations. • Select streaming services. • Internet, cable and phone services.
Q2 (April 1 - June 30)
• Grocery stores. • Gym memberships and fitness clubs. • Select streaming services.
Q3 (July 1 – Sept. 30)
• Amazon.com. • Whole Foods Market.
Q4 (Oct. 1 – Dec. 31)
TBD (In 2019, department stores, PayPal and Chase Pay.).
Wondering whether you qualify? Use NerdWallet’s tool to prequalify for Chase credit cards.
For Costco shoppers, this news couldn’t have come at a better time. Costco, a wholesale club offering products from 2-gallon containers of maple syrup to ready-to-install porch swings, will start accepting Visa cards on June 20. (Previously, the only credit cards the retailer accepted were American Express cards.) If you max out the quarterly $1,500 spending caps on the Chase Freedom®, you could earn $150 in rewards in the next six months. That’s leaps and bounds more than what you’d likely earn at Costco using other cards.
How the promotion works
To earn 5% cash back on your wholesale club purchases — which includes Costco, BJ’s and Sam’s Club, according to a statement from Chase — just activate your 5% categories as you normally would. Here’s how:
Navigate to Chase Freedom®’s rewards calendar page and log in.
Go to the current quarterly bonus category and click “Activate Now.”
According to Chase, the “wholesale club” category doesn’t include gas purchased at Costco. The new Costco Anywhere Visa® Card by Citi, which gets 4% on gas, is still one of the best cards for that. However, you’ll still be able to earn 5% back on your Costco gas purchases when the Chase Freedom® offers 5% on gas, which it generally does at least once a year.
You can activate these 5% reward categories retroactively, until two weeks before the end of each quarter. For example, if you didn’t activate your third quarter bonus categories, but shopped at Costco on July 10, you could still get those 5% rewards from the 10th credited to your account if you activated the categories afterward. And if you're worried about forgetting to activate your bonus categories, you can also set up reminders via text, email, or the Google, Outlook, iCal or Yahoo calendar through the Chase Freedom® website.
Other Visa cards to use at Costco
Chase isn’t the only issuer trying to get the attention of wholesale club members, but right now, it’s offering the best deal.
Recently, Bank of America® announced that its BankAmericard Cash Rewards™ credit card would offer 2% cash back at wholesale clubs, in addition to the 3% on gas and 2% at grocery stores the card already offers. The card comes with a $2,500 quarterly cap on combined gas/grocery/wholesale club purchases; once you hit the cap, all purchases in those categories earn 1%.
And, of course, the new Costco Anywhere Visa® Card by Citi offers an unlimited 2% cash back on general Costco purchases (4% on gas). That’s twice what you could earn for general Costco purchases on the old TrueEarnings® Card from Costco and American Express, but not as good as 5% cash back. You'd have to spend a minimum of $12,000 at Costco (not including gas) to get the same rewards from the Costco card in six months as you would with the Chase Freedom®.
As Costco starts accepting Visa cards, other issuers might jump into the fray, offering even better deals. But for now, the Chase Freedom®'s 5% offer through the end of the year is the best rewards rate you'll find.