It seems like an ever-increasing share of my grocery and household purchases has shifted to Costco, to the point where having the best credit card for Costco purchases has been a serious cost saver for our household. With large amounts of food, gas from the usually cheapest-place-in-town Costco gas station, occasionally Costco wine and liquor, 36-packs of toilet paper, socks and underwear, an occasional pizza slice, Kirkland dog food, and even our dog’s insulin ($155/month!) – it all adds up fairly quickly.
The Costco branded “Costco Anywhere Visa Card by Citi” is a great credit card for Costco purchases – but it’s not the only one that members can use. In fact, sometimes it’s not even the best card for Costco purchases.
In this article, I’ll highlight my picks for the best credit cards to use at Costco. Obviously, this article is going to be of most interest for Costco members, but even non-Costco members might discover a few opportunities to turn up their cash back rewards game. And if you’re not a Costco member, check out my article on how to shop at Costco without a membership, so that you can see if it would be worth it to you. I ran the numbers on if Costco membership is worth the cost and believe that it is. If you find otherwise, you can ask Costco for a membership fee refund.
And, of course, the standard disclaimers for all credit card use apply here: use responsibly and pay in full every month.
What Types of Credit Cards Can be Used at Costco
I’ll highlight what I think are the best credit cards for Costco, but it’s important for Costco members to first know that your options for what types of credit cards you can use at Costco are limited. Costco is somewhat unique among retailers in that it has historically had an exclusive agreement with just 1 credit card processor at any given time to be used in store.
In 2016, Costco switched processors from American Express to Visa. Today, this means that any credit card you use at Costco must be a Visa card. You are not able to use American Express, Mastercard, or Discover cards at Costco (you can use Visa, Mastercard, or Discover on Costco.com, however). That immediately rules out some great non-Visa credit cards, including the Citi Double Cash Mastercard, one of my personal favorites for earning 2% cash back on all purchases.
The Costco Credit Card Merchant Code
It’s also worth noting that Visa does not categorize purchases at Costco within the “grocery” or “supermarket” categories. Instead, regular Costco store purchases are categorized as “wholesale clubs”.
There are a few notable exceptions to this:
- Costco gas purchases are categorized as “Gas Stations”.
- Costco travel purchases are categorized as “Travel Agencies and Tour Operations”.
These categorized merchant codes will impact the rewards you get for Costco purchases are important to note when choosing what card to use.
The Best Credit Cards for Costco Purchases
Costco Anywhere Visa Card by Citi
Let’s start with the obvious one first – the Costco branded Costco Anywhere Visa Card by Citi. This card sets a fairly high floor for what should be considered “good rewards” when you shop at Costco for gas (@4% cash back) and Costco warehouse and online purchases (@2% cash back). This is one store-branded credit card that is actually worth it, potentially even if you’re not a Costco member, as it offers generous cash back rewards in key categories, with no annual fee. The cash back rewards, by category, break out as such:
- 4% on eligible gas, including gas at Costco for the first $7,000 per year and then 1% thereafter
- 3% on restaurants and eligible travel purchase worldwide
- 2% on all other purchases from Costco and Costco.com
- 1% on all other purchases
The downsides to this card are the 1% cash back on other purchases outside of the categories highlighted, and cash back comes in the form of an annual rebate check (versus whenever you want) that is mailed out in February and must be redeemed in-store.
Penfed Power Cash Rewards Visa
The Penfed Power Cash Rewards Visa comes with no annual fee and offers up to 2% cash back rewards on all purchases – making it a great all around cash back rewards credit card that can be used at Costco.
The card normally returns 1.5% cash back on all purchases, but if you’re a “Penfed Honors Advantage member”, it’s bumped up to 2% cash back. To qualify for the PenFed Honors Advantage Program you must either:
- Be in an active military service status, a member of the Reserves or National Guard, an honorably discharged U.S. Military Veteran or retired from such service OR
- The member must be the primary owner on both the credit card and checking accounts of any existing open PenFed product, excluding PenCheck Limited accounts, or open a new Access America Checking account with PenFed.
#2 is easy enough to achieve.
Fidelity Rewards Visa Signature Card
The Fidelity Rewards Visa Signature Card is another 2% everywhere Visa card with no annual fee that can be used at Costco. 2% cash back is earned when you deposit your rewards into a Fidelity brokerage account, IRA, HSA, or 529. The redemption amount varies on other redemption options. If you deposit into a standard brokerage account, you can always withdraw funds later on, making the effective cash back equivalent 2%.
Alliant Visa Platinum Rewards Credit Card
The Alliant Visa Platinum Rewards Card, from Alliant Credit Union, is yet another 2% everywhere Visa with no annual fee that can be used at Costco. Technically, you earn 2 points per dollar spent, but points can be redeemed for up to $0.01 each for cash back and gift cards.
Chase Freedom and Chase Freedom Flex
The Chase Freedom and Chase Freedom Flex Visa cards are modest rewards cards, primarily with 1% cash back and no annual fees. But what makes them of special interest to Costco members, however, are the 5% quarterly bonus categories, which will occasionally be in the “gas station” (for Costco gas) and “wholesale club” (for Costco) categories.
In Q1 and Q2 of 2020 and in Q1 of 2021, for example, both the Chase Freedom and Freedom Flex cardholders could earn 5% in the wholesale club category (among others). A cumulative $1,500 spending maximum per quarter accrues for the 5% bonus categories, and then points accrue at 1% after that.
Note that the original “Chase Freedom” is still alive, but no longer available to new applicants.
Best Credit Card for Costco Discussion:
What credit card(s) do you use at Costco, and why?