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Is the TrueEarnings Credit Card From Costco and American Express a Good Deal?

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Editor’s Note: On March 31, 2016, Costco will stop partnering with American Express and TrueEarnings® Card from Costco and American Express will be discontinued. Citi, Costco’s new partner, will send TrueEarnings® Card from Costco and American Express cardholders a new Visa card co-branded by Costco as a replacement.

Costco shoppers who spend a lot at the pump may well end up considering the TrueEarnings® Card from Costco and American Express at some point. But it may not provide the best deal for heavy gas spenders – take a look at the Nerds’ analysis below for more details.

What the TrueEarnings® Card from Costco and American Express offers

The TrueEarnings® Card from Costco and American Express is undoubtedly a solid option for people who do a lot of driving. With it, you’ll earn 3% cash back at U.S. gas stations and on Costco gas purchases (up to $4,000 spent per year), 2% cash back on eligible travel and U.S. restaurant purchases, and 1% cash back on all other purchases.

That’s an impressive return for your swiping at the pump, especially because it charges a $0 Annual Fee with your paid Costco membership. Plus, the TrueEarnings® Card from Costco and American Express also offers frequent Costco shoppers an extra layer of convenience: It functions as a payment card and your Costco membership card.

Aside from the annual cap on bonus cash back earnings on gas, the only other major drawback to the card is that you can only redeem your rewards once per year at Costco stores.

Other good cards for road warriors

The TrueEarnings® Card from Costco and American Express is no slouch for big gas spenders, but it’s far from the only card that offers impressive rewards at the pump. Here are two other great alternatives:

The Blue Cash Preferred® Card from American Express

The Blue Cash Preferred® Card from American Express is a good option for people who devote a lot of their income to gas and groceries. With it, you’ll score 6% cash back on every dollar spent at U.S.-based supermarkets (up to $6,000 spent per year — then 1%), 3% cash back on every dollar spent at U.S.-based gas stations and select department stores, and 1% cash back for every dollar spent on other purchases.

This is a very high rewards rate on key everyday spending categories that many folks will get a lot of value from. What’s more, you’ll have the flexibility to redeem your cash back throughout the year as statement credits.

Unlike the TrueEarnings® Card from Costco and American Express, the Blue Cash Preferred® Card from American Express offers a signup bonus: Limited Time Offer: Apply by 5/3/17 – Earn 10% cash back on purchases at U.S. Restaurants in the first 6 months, up to $200 back. Earn $150 back after you spend $1,000 in purchases on your new Card in your first 3 months. Terms Apply. Its annual fee is $95, but the Nerds suspect that serious gas and grocery spenders will earn enough in rewards to outweigh this cost.

The Wells Fargo Propel 365 American Express® Card

The Wells Fargo Propel 365 American Express® Card is another alternative to the TrueEarnings® Card from Costco and American Express, but it’s better for people who devote a lot of spending to dining out in restaurants. You’ll earn 3 points per dollar spent at the pump, 2 points per dollar spent on dining in restaurants, and 1 point per dollar spent on other purchases. Points are worth $.01 each when redeemed for a gift card or statement credit, and there’s no limit to the points you can earn.

The Wells Fargo Propel 365 American Express® Card also offers a signup bonus: Earn 20,000 bonus points when you spend $3,000 in net purchases in the first 3 months. Its $0 for the first year, then $45. Unlike our other two picks, it charges no foreign transaction fees, so it’s a good choice for overseas travel.

Should you get the TrueEarnings® Card from Costco and American Express?

The Nerds think the TrueEarnings® Card from Costco and American Express is a good option for people looking to earn bonus cash back on gas, travel and restaurant spending. You should keep it on your radar if a lot of your income goes to these purchases and you don’t mind redeeming your rewards in one fell swoop each year.

Just remember that you’ll only get 3% back on gas purchases up to $4,000 spent each year. That works out to about $333 per month; if you spend substantially more than that at the pump, you might be better off going with one of the other cards discussed above.

Lindsay Konsko is a staff writer covering credit cards and consumer credit for NerdWallet. Follow her on Twitter @lkonsko and on Google+.

Image via iStock.