Costco Hiked Membership Fees Again. Is Its Credit Card Still Worth It?
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On Sept. 1, 2024, warehouse giant Costco increased its membership fees for all of its membership tiers. Gold Star and Business memberships are now $65 instead of $60, and the Executive membership rose $10 to $130.
This hike is the third since 2011. That year, the basic plan increased from $50 to $55, while an Executive membership went from $100 to $110. Then in 2017, Costco raised membership prices by another $5 for Gold Star and Business members, and $10 for Executives.
Given the most recent price hike, now is as good a time as any to evaluate whether it makes sense to keep, or open up, the Costco Anywhere Visa® Card by Citi. The Costco credit card has a $0 annual fee, but you must have a Costco membership to qualify for it. In other words, the Costco credit card isn’t as "free" as it seems.
It can still provide a lot of value, certainly. But here are six questions to help you weigh that value for your household.
1. Do you spend a lot on gas and/or EV charging?
The Costco card’s richest rewards are at the pump or EV station. It earns 4% at gas and EV stations on up to $7,000 annual spending. (After that, the card earns 1%.) That’s an excellent rewards rate with a high enough spending cap to accommodate even the heaviest of commuters. Remember, too, that Costco members get access to the warehouse’s gas stations, which typically sell cheaper gas compared with standalone stations.
2. Do you spend a lot on dining and travel?
Dining and travel purchases get 3% cash back with the Costco credit card with no cap on earnings, a solid rewards rate. To stack the savings, cardholders can book travel through the Costco Travel service, then pay for it with the credit card to get 3% back.
Costco also sells restaurant gift cards at discounted prices. You could buy a gift card for a fancy upcoming dinner with the Costco Visa, and then also pay any remaining tab with the card to get 3% back on the bill.
3. Is 2% back at Costco good enough?
Perhaps the biggest surprise about the Costco credit card is its modest rewards rate — 2% cash back — on Costco purchases. That's not terrible for a co-branded credit card, but other cards can reward you more handsomely for shopping at Costco.
For example, the U.S. Bank Shopper Cash Rewards™ Visa Signature® Card earns 3% cash back up to a $1,500 quarterly cap on one everyday category that you select. (After hitting the cap, you’ll earn an unlimited 1.5%.) To get 3% back at Costco, you’d opt in to the “wholesale clubs” category. The Shopper Cash card does have an annual fee, though: It’s $0 intro for the first year, then $95.
Say you spend $500 a month, or $6,000 a year, at Costco. At 2% back, you’d earn $120 worth of rewards with the Costco Anywhere Visa® Card by Citi. But with the Shopper Cash card and its 3% rate, you’d have $180 by the end of the year.
4. Does the unusual reward redemption process bother you?
Compared with other credit cards, the Costco card’s reward redemption process is restrictive.
Cardholders typically must wait until February of each year to get their annual reward certificate, and that certificate expires on Dec. 31 of the year it was issued.
A whole year is a long time to wait to receive your rewards, especially when other cards process rewards within a single billing cycle. Heck, some cards nowadays let you redeem rewards as soon as they hit your account.
Current Costco credit cardholders who are considering closing their accounts may want to wait until they receive their annual reward certificate in February. Otherwise, you won’t receive any rewards.
5. Do you want a sign-up bonus?
If you're already a Costco credit card holder, you can ignore this question. But if not, be aware that there's no upfront welcome offer, as you might expect to find on any number of other credit cards. There's not even a one-time store discount.
Even a $50 sign-up bonus would make the Costco card more enticing because it could defray the cost of an annual membership.
6. Will another credit card do?
For those not wedded to Costco — you can live without those $1.50 hot dogs, right? — another warehouse club’s credit card could be a better choice. The Sam's Club® Mastercard®, for example, requires a Sam’s Club membership, but it’s only $50 for the basic level compared to Costco’s $65. A BJ’s Wholesale membership costs $55 for the Club level and $110 for Club+. Depending on the membership tier you select, you can earn up to 5% back on BJ’s purchases with a BJ’s credit card.
Or, you might eschew warehouses entirely and do your bulk shopping with Amazon instead. Yes, Amazon Prime is $139 a year, but you get free two-day shipping and unlimited streaming through Prime Video. An Amazon Prime account also qualifies you for the Prime Visa, which earns a stellar 5% at Amazon and Whole Foods.
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