Costco’s switch from Amex to Visa a win for customers

When is costco switching credit cards

Costco’s switch from Amex to Visa a win for customers

When is costco switching credit cards

By Chris Isidore

NEW YORK (CNNMoney) — Costco is switching from American Express to Visa, and it looks like that’ll be a good deal for customers.

The store said a year ago it’s ending its agreement with American Express and switching to Visa on June 20. That means that Costco stores will only take Visa, and the Costco-branded credit card will be Visa instead of AmEx.

And it turns out that the new card will have an even better cash-back program.

The new Costco Visa, which can be used everywhere, will give shoppers 4% back on the first $7,000 of gas they buy, and 1% on purchases after that. The old Costco card only gave 3% back on the first $3,000 of gas purchases.

The new card will give 3% cash back on restaurant and eligible travel purchases, compared to 2% on their American Express.

Additionally, it will give 2% back on Costco purchases and 1% back on all other purchases. The Costco American Express paid 1% back on all other purchases, whether or not they were at Costco.

The old card was very popular with members. Back in February 2015, when the switch was announced, 88% of nearly 50,000 holders of the Costco American Express cards gave it either four or five or four stars in reviews on the American Express site.

But the new Visa card, which will be from Citi, is among the best cash-back offer of any card available on the market according to Virginia McGuire of NerdWallet.

“If you spend a lot on gas, restaurants and travel, this card has pretty great rewards,” she wrote in a recent review.

The new Visa card has no annual fee other than the $55 Costco membership, and Costco American Express cardholders will be automatically switched over to it.

Accumulated rewards will also transfer.

One hitch: The cash back that shoppers will get with the new card will be in a voucher that can only be redeemed at Costco, rather than at a bank. The card holder can get cash, or use the money for a Costco purchase, which is obviously what Costco is counting on.

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Costco vs. Sam's Club: Which has better rewards credit card?

If you're one of the many Americans who shops at wholesale stores, beware! Here are five things you should never buy in bulk.

When is costco switching credit cards

In switching its credit card to Visa, Costco has upped its rewards game. (Photo: Associated Press)

When is costco switching credit cards

In many ways, Costco (NASDAQ:COST) and Wal-Mart's Sam's Club are interchangeable. Both have their supporters who would tell you why one is better than the other, but at the end of the day, both warehouse clubs offer discounts on a wide range of items to people who pay a membership fee.

One chain may have a better price on tubs of mayonnaise while the other offers a great deal on snow tires, but those are moving targets which change regularly. It's hard to compare the two warehouse clubs on the basis of any specific savings because an item sold at a good price one day may not even be offered the next.

But one area where both companies can be compared is their rewards credit cards. Sam's has its Sam's Savings MasterCard (NYSE:MA) while Costco launches its new Costco Anywhere Visa (NYSE:V) June 20. While the two warehouse clubs also offer different deals for business members, this comparison will look at what each rewards credit card offers to individual members.

In switching its credit card from American Express to Visa, Costco upped its rewards game. The new card has no annual fee on its own but requires that holders pay the warehouse club's $55 annual Gold Star membership charge.

Members who hold the card get 4% back on eligible gas purchases (for the first $7,000 spent in a year; then it drops to 1%). They also receive 3% cash back on purchases made at restaurants and eligible travel and they earn 2% cash back on all Costco purchases, as well as 1% back on anything else bought with the card. Card holders also get worldwide car rental insurance and worldwide travel accident insurance as well as damage and theft protection for some purchases.

Costco does not list a maximum on total rewards that can be earned through its program on the Citigroup (NYSE:C) Web page that details the terms and conditions of the credit card offer. A request to clarify that there was no rewards limit through Citigroup 's Twitter support (which is where the card issuer directs consumers looking for more help) was directed to a different Web page, which also does not mention any annual rewards limit except capping the gas reward.

A basic Sam's Club annual membership costs $45, or $10 less than its rival charges. Of course, to get a credit card you must hold a valid membership.

A maximum of $5,000 in cash back rewards can be earned in a calendar year at Sam's Club. (Photo: Associated Press)

If a Sam's member spends $100 on the day he or she opens his or her Sam's Savings MasterCard account, he or she gets credited $40 on that initial purchase. Members also get 5% back on gas — up to $6,000 a year (then it drops to 1% with no limit), 3% back on dining and travel, and 1% back on all other purchases. Card holders also receive price protection on some purchases as well as identity theft resolution services.

A maximum of $5,000 in cash back rewards can be earned in a calendar year.

Both companies have very similar offers with nearly identical basic rewards. Sam's however has cheaper membership in general and offers $40 back if a new member spends $100 on the first day. That's enough to make its card a better deal for most people.

Of course, as is the case with all credit card offers, rewards programs only make sense for people who do not carry a balance. If you don't pay off what you owe each month, interest charges will quickly negatively offset any value received from getting cash back or other rewards.

While Sam's offers the initial cash back, which makes its card a better offer for many people, it does cap overall rewards, which Costco's card does not. That means that for heavy spenders — people who will buy enough to earn more than $5,000 annually — Costco offers a better deal.

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Daniel Kline has no position in any stocks mentioned. He is always tempted to buy way too much candy at Costco. The Motley Fool owns shares of and recommends Costco Wholesale , MasterCard, and Visa. The Motley Fool recommends American Express. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Costco bungles switch to Visa, causing more than 1.5M customer service calls

The banner at the top of Costco’s Facebook page reads “Costco + Visa = (heart emoji),” but for many customers, the first few days of the retailer’s new charge-card alliance have been anything but heartwarming.

On June 20, Costco took the final step in severing its 17-year relationship with American Express and began exclusively accepting Visa for credit card purchases at its stores. For more than 11 million customers, the switch meant cutting up their Costco-branded American Express cards and swapping them for a new Visa card issued by Citigroup.

A transition that executives promised would be seamless has turned into a customer service fiasco.

Citigroup has logged more than 1.5 million customer service calls about problems with the cards, said Jennifer Bombardier, a spokeswoman for Citigroup. Costco’s social media pages are filled with thousands of scathing complaints. Many customers say their new cards have not yet arrived, and some report problems activating or using their cards or getting access to their accounts online.

The deluge of complaints swamped Citigroup’s call center, leaving some people waiting for more than an hour or unable to connect at all. A note on Citigroup’s website warns of high call volume and apologizes for “the long wait time that you may encounter.”

The service issues have confounded regular customers. Derek Gamble, a Costco shopper who called Citigroup on Thursday to ask why he hadn’t yet received his new card, reached a service representative but says he came away from the call feeling more puzzled than when he started.

“The rep talked in circles for a while and said they’re doing all they can and that I should have a card in five to seven business days,” said Gamble, a lawyer in Temecula, Calif. His request for a faster shipment was rebuffed. Until the card arrives, he says, he’s holding off on his weekly Costco shopping trip.

Many retailers offer branded credit cards, but Costco’s is uniquely powerful. The company made sales of nearly $114 billion last year to its 81 million members. For nearly two decades, it accepted no cards other than American Express at its retail stores.

But last year, the companies said they would sever their relationship after a disagreement about renewal terms. “The numbers didn’t add up,” Kenneth Chenault, American Express’ chief executive, said in a presentation to investors.

Costco stopped accepting new card applications in November and has been working on its card transition plan for more than a year. But for customers, the switch came with an unusually abrupt deadline: As of June 20, their Costco-branded American Express cards stopped working for all new purchases, and customer information and account balances were transferred to Citigroup.

Citigroup spent last weekend feverishly working to convert the millions of new cardholders it inherited onto its system.

“Citi completed one of the single largest portfolio conversions in history,” Bombardier said. “We sincerely apologize to those who have been inconvenienced.”

Costco representatives did not return calls seeking comment.

The last major store-branded card switch, when Wal-Mart moved its cards from Discover to MasterCard in 2014, was done in phases, and customers were able to continue using their existing cards until they received and activated their new ones.

That helped reduce the customer service load and avoid the deluge Citigroup is experiencing, said Matt Schulz, an analyst for CreditCards.com.

“There’s always going to be friction in these sorts of things, but the hubbub surrounding Costco is the biggest outcry that I can remember,” he said.

He expects the storm to subside in a few days as Citigroup smooths out its problems, but customers are also facing other irritations at the cash register, namely chip cards.

“We’re also seeing a lot of discussion involving EMV cards,” he said, referring to chip-based cards many card-issuers and merchants have begun to use. “You have to look at the Costco thing in that greater context: There’s a lot of people who are frustrated and confused with other things going on with credit cards as well.”


The New Costco Anywhere Visa Card by Citi Is Good News for Costco Shoppers

When is costco switching credit cards

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When is costco switching credit cards

The Costco Anywhere Visa® Card by Citi from our partner Citi is the new Costco credit card, and there are many reasons why Costco members should rejoice. The card comes with great cash back benefits.

Cardholders will earn the following cash back:

  • 4% cash back on eligible gas worldwide for the first $7,000 per year. All gas purchases over that amount will earn 1% cash back.
  • 3% cash back on restaurant and eligible travel purchases worldwide
  • 2% cash back on all other Costco and Costco.com purchases
  • 1% cash back on all other purchases

With these high cash back percentages, it has become one of the highest cash back credit cards on the market. (See also: Best Credit Cards For Everyday Purchases)

You don’t have to even be a major Costco shopper to see the awesome cash back benefits. Families who spend $250 per month on gas, $150 in eating out per month, and $250 per month on Costco groceries will earn $234 in cash back at the end of the year. Basically if you use your Costco Anywhere Visa Card for your regular monthly spending, you will essentially earn a free Costco shopping trip. Your cash back reward coupon must be redeemed at Costco, but you can redeem the coupon for cash and spend your cash back elsewhere.

  • No annual fee with paid Costco membership
  • Purchase APR: 0% Intro APR for 7 months; after that, 16.24% variable
  • Balance Transfer APR: 16.24% variable
  • $5 or 3% Balance Transfer Fee (whichever is greater)
  • 3% Foreign Transaction Fee

The new card comes with worldwide car rental insurance and worldwide travel accident insurance. It also comes with damage and theft protection, which will cover repairs and refunds for items purchased with your Costco Anywhere Card.

If you are already a Costco member, then the Costco Anywhere Visa is a good deal. The card does not come with an annual fee, but you will have to maintain a Costco membership at $60 per year (or $120 for the Executive Gold membership).

Most credit cards that offer grocery rewards don’t include warehouse clubs as part of their “supermarket9rdquo; listing. The only way to get rewards on your Costco purchases is to use a flat rate rewards card (must be Visa), have an Executive Gold membership (2% cash back), or with this new card. In fact, if you use the new Costco Anywhere Visa card and have an Executive Gold membership, you’d essentially earn 4% cash back on your Costco trips. (See also: Best Credit Cards that Offer Rewards on Groceries)

If you are already a Costco member and do a decent amount of shopping there, the Costco Anywhere Visa Card is definitely worth it. Besides getting cash back on Costco purchases, it offers one of the highest cash back opportunities for gas, restaurant, and travel. So it’s not just a card for Costco purchases. This can be your go-to credit card for all your purchases.


Costco’s Transition to Visa Cards Riddled With Problems

The banner at the top of Costco’s Facebook page reads “Costco + Visa = ♥,” but for many customers, the first few days of the retailer’s new charge-card alliance have been anything but heartwarming.

On Monday, Costco took the final step in severing its 17-year relationship with American Express and began exclusively accepting Visa for credit card purchases at its stores. For more than 11 million customers, the switch meant cutting up their Costco-branded American Express cards and swapping them for a new Visa card issued by Citigroup.

A transition that executives promised would be seamless has turned into a customer service fiasco.

Citigroup has logged more than 1.5 million customer service calls, according to Jennifer Bombardier, a spokeswoman for Citigroup.

Costco’s social media pages are filled with thousands of scathing complaints. Many customers say their new cards have not yet arrived, and some report problems activating or using their cards or getting access to their accounts online.

The deluge of complaints swamped Citigroup’s call center, leaving some people waiting for more than an hour or unable to connect at all. A note on Citigroup’s website warns of high call volume and apologizes for “the long wait time that you may encounter.”

The service issues have confounded regular customers. Derek Gamble, a Costco shopper who called Citigroup on Thursday to ask why he hadn’t yet received his new card, reached a service representative but says he came away from the call feeling more puzzled than when he started.

“The rep talked in circles for a while and said they’re doing all they can and that I should have a card in five to seven business days,” said Mr. Gamble, a lawyer in Temecula, Calif., in an interview. His request for a faster shipment was rebuffed. Until the card arrives, he says he’s holding off on his weekly Costco shopping trip.

Many retailers offer branded credit cards, but Costco’s is uniquely powerful. The company made sales of nearly $114 billion last year to its 81 million members. For nearly two decades, it accepted no cards other than American Express at its retail stores.

But last year, the companies said they would sever their relationship after a disagreement about renewal terms. “The numbers didn’t add up,” Kenneth I. Chenault, American Express’s chief executive, said in a presentation to investors.

Costco stopped accepting new card applications in November and has been working on its card transition plan for more than a year. But for customers, the switch came with an unusually abrupt deadline: As of Monday, their Costco-branded American Express cards stopped working for all new purchases, and customer information and account balances were transferred to Citigroup.

Citigroup spent last weekend feverishly working to convert the millions of new cardholders it inherited onto its system.

“Citi completed one of the single largest portfolio conversions in history,” Ms. Bombardier said. “We sincerely apologize to those who have been inconvenienced.”

Costco representatives did not return calls seeking comment.

The last major store-branded card switch, when Walmart moved its cards from Discover to MasterCard in 2014, was done in phases, and customers were able to continue using their existing cards until they received and activated their new ones.

That helped reduce the customer service load and avoid the deluge Citigroup is experiencing, said Matt Schulz, an analyst for CreditCards.com.

“There’s always going to be friction in these sorts of things, but the hubbub surrounding Costco is the biggest outcry that I can remember,” he said.

He expects the storm to subside in a few days as Citigroup smooths out its problems, but customers are also facing other irritations at the cash register, namely chip cards.