Eight solid alternatives to the Capital One Costco Mastercard for Canadians - MoneySense

Eight solid alternatives to the Capital One Costco Mastercard for Canadians

If you’re a frequent Costco shopper, you may use the Costco branded Capital One Mastercard to pay for your purchases. However, other Mastercards may help you rack up more rewards, depending on your spending habits.

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Costco Credit Card

Costco wasn’t the world’s first retail warehouse club, but in the nearly 35 years since opening in Canada, it’s become a staple shopping destination for families and groups who want deep discounts on bulk buys. The way that Costco works is that it relies on membership—you can’t walk into a location without signing up—but for those who pay the annual fee, starting at $60, the savings can be significant.

Up until 2014, the only credit card accepted by Costco was a store-branded American Express. Unless you were carrying that card, you’d have to pay in cash at the till, making the shopping experience clunky and inconvenient. This deal changed in 2015 when Costco partnered with Mastercard instead. In general, this was seen as an improvement—American Express isn’t accepted at nearly as many places as Mastercard.

Today, in addition to cash, Canadians can pay for their Costco purchases using any Mastercard, including the store’s branded Capital One Mastercard for Costco members. But is the branded card the best option for Costco shoppers, especially since Costco isn’t recognized as a grocery store by Mastercard? If not, what are the alternatives? Read on to learn the details of the Capital One Costco Mastercard and learn about eight of its most attractive alternatives.

Capital One Costco Mastercard for Costco members

Capital One Costco Mastercard Costco’s official credit card is exclusively for Costco members. However, whether you’re spending at Costco or elsewhere, this no-annual-fee card doesn’t match the perks of some of the cards we’ll discuss below. As a cash back Mastercard it offers a 3% return on restaurant spends and 2% on gas, as well as a regular 0.5% rate on all other purchases up to $3,000 per year (after which card holders earn 1% back). Additionally, your purchases are covered by an extended warranty and price protection. Cardholders get travel insurance including common carrier travel accident, car rental collision/loss damage waiver, baggage delay coverage and 24/7 travel assistance.

While it’s true that this card carries no annual fee, it’s only available to Costco members—who pay $60 for the membership. The fact that there’s no cap on cash back earnings is nice, but it highlights this product’s biggest downside: The Capital One Costco Mastercard doesn’t actually allow you to earn all that much at Costco. In fact, the highest cash back rates are on restaurants and gas. (While you can fill up at Costco, you still earn the same amount of cash back no matter where you purchase fuel.) At a 0.5% earn rate on the first $3,000 spent at Costco and 1% after that (purchases at the warehouse would fall into the “everything else” category), the cash back aspect is tepid at best. Furthermore, each January, you’re issued your cash back reward as a coupon, which can only be used at Costco. The suite of purchase insurance benefits is pretty standard, and the travel offerings aren’t as competitive as some of the cards mentioned below.

Simply put, the card fails to strengthen the Costco shopping experience. There are other Mastercard products, all of which can be used at Costco, that will better meet a variety of consumer needs.

  • Card type: Cash back
  • Annual fee: $0
  • Cash back: 3% on restaurant spends; 2% on gas; 0.5% on all other purchases up to $3,000 per year, then 1% after that
  • Additional perks: Travel insurance including common carrier travel accident, car rental collision/loss damage waiver and baggage delay coverage; 24/7 travel assistance; purchase assurance, extended warranty and price protection

The best Costco Credit Cards in Canada


Best for travel

MBNA Rewards World Elite Mastercard*

MBNA Rewards World Elite Credit CardThe MBNA Rewards World Elite card offers cardholders an earn rate of 2 MBNA Rewards Points per dollar spent at Costco which, when redeemed on travel, works out to a very healthy 2% return. The card’s welcome offer of 20,000 Points after $2,000 or more spent in the first three months, plus 10,000 Points after you sign up for e-statements, gets you off to a flying start and with no expiry date, you can jet off to far away destinations next week or next year.
This card doesn’t come with included travel emergency medical insurance but it does have common carrier collision coverage, rental car collision damage coverage and also offers a discount at Avis and Budget Rent A Car outlets.

  • Card type: MBNA Rewards, redeemable for travel
  • Annual fee: $120
  • Earn rate: 2 MBNA Rewards Points/dollar
  • Income requirement: $80,000 (personal) or $150,000 (household)
  • Additional perks: Car rental collision damage waiver; discounts at Avis and Budget Rent A Car; purchase assurance, price protection and extended warranty

Click here for more details about the MBNA Rewards World Elite*


Honourable mention for travel

BMO World Elite MasterCard*

BMO World Elite Rewards Credit CardThis Mastercard from Bank of Montreal operates in the BMO Rewards environment allowing card holders to earn 3 BMO Rewards Points per dollar on travel, dining and entertainment spending, and 2 Points per dollar on everything else. BMO points spent on travel booked through the full service online travel agency are worth 0.7% each, resulting in an earn rate of 1.4% per dollar at Costco. New applicants receive a welcome bonus of 35,000 Points and have their first year’s annual fee waived.

The earning potential of this card is just one of its advantages; it also carries serious benefits for travellers in its insurance package. The included BMO World Elite Total Travel and Medical Protection package provides out-of-province/out-of-country emergency medical protection up to $2 million, trip interruption/delay, car rental collision damage coverage and more (for unlimited trips per year up to 21 days in length). As an Elite card, it also gives members complimentary Mastercard Airport Experiences membership, with four free passes annually.

  • Card type: BMO Rewards
  • Annual fee: $150 (waived for first year)
  • Earn rate: 3 BMO Rewards Points/dollar on travel, dining and entertainment; 2 Points/dollar on everything else
  • Income requirement: An annual income of $80,000 (individual) or $150,000 (household)
  • Additional perks: BMO World Elite Total Travel and Medical Protection package provides insurance including out-of-province/out-of-country emergency medical protection up to $2 million, trip interruption/delay and car rental collision damage coverage; free membership in Mastercard Airport Experiences provided by LoungeKey which includes access to more than 1,000 lounges worldwide regardless of airline, with exclusive VIP access and 4 annual complimentary passes; purchase protection and standard warranty

Click here for more details about the BMO World Elite*


Best for cash back

Rogers Platinum or World Elite Mastercard

If cash back, rather than points, is the benefit you’re after, investigate these two cards from Rogers. The best card for you will depend on your annual income.

Rogers Platinum Mastercard

Rogers Platinum Cedit Card

First up is the Rogers Platinum Mastercard. With no fee and no minimum annual income requirement, this product is highly accessible and a very strong cash back contender. Purchases at Costco paid for with this card are eligible for 1.25% cash back—and that’s not even their banner perk. This card is terrific for travellers and cross-border shoppers, giving 3% back on foreign currency transactions and 2% back on Rogers products and services. With a $25 welcome bonus, this product far outshines the Capital One card.

  • Card type: Cash back
  • Annual fee: $0
  • Earn rate: 1.25% cash back on eligible gas, groceries and shopping
  • Additional perks: $25 welcome bonus when you make your first purchase within 3 months

Rogers World Elite Mastercard

Rogers World Elite Credit CardThose with an annual income of $80,000 or more can boost their rewards with the Rogers World Elite Mastercard. Purchases made at Costco receive a very healthy 1.75% back, while foreign transactions get 4%. Like the free Platinum card, this product lets customers earn 2% back on Rogers products and services. With a robust suite of insurance products and access to airport lounges, this card is well worth a look.

  • Card type: Cash back
  • Annual fee: $0
  • Earn rate: 1.75% cash back on eligible gas, groceries and shopping (including Costco)
  • Additional perks: $25 welcome bonus when you make your first purchase within 3 months; airport lounge access; travel, medical and rental insurance; purchase protection


Best for flexible rewards

MBNA Rewards Platinum Plus Mastercard*

This no-annual-fee card combines good earning potential with a flexible redemption program so you can use your Points for cash, flights, hotels and merchandise. Card holders earn 2 MBNA Points for every dollar spent on gas, restaurants and groceries (up to $5,000 annually per category), and 1 Point per dollar on everything else, including Costco, which doesn’t fall under the grocery store category. And, your Points never expire. To start you off, MBNA is offering new applicants the ability to earn four times the Points per $1 on eligible gas, grocery and restaurant purchases (up to 10,000 Points).

  • Card type: MBNA rewards
  • Annual fee: $0
  • Earn rate: 2 MBNA Points per dollar spent on gas, groceries and restaurants; 1 Point/dollar on everything else
  • Travel perks like $1M in common carrier accidental death and dismemberment, collision damage and accidental death and dismemberment on car rentals and personal effects coverage; purchase assurance, price protection and extended warranty

Click here for more details about the MBNA Rewards Plus Mastercard*


Best for Air Miles collectors

BMO Air Miles World Elite Mastercard*

BMO Air Miles World Elite MastercardIf you’re an Air Miles collector, there is no better card to help you collect points and get you closer to your goal. Like the BMO World Elite Mastercard above, this Air Miles branded card has a strong suite of travel protection and perks including complimentary membership in Mastercard Airport Experiences provided by LoungeKey, and the BMO Air Miles World Elite Travel and Medical Protection. However, for Air Miles collectors, it’s the eye-catching 1 Mile per $10 earn rate that is of interest. If you paid for a $500 Costco purchase with this card it would put 50 Miles in your account. New applicants get up to 3,000 Miles (1,000 on first purchase and 2,000 when you spend $3,000 in the first three months) and the first year’s annual fee waived.

  • Card type: Air Miles rewards
  • Annual fee: $120 (first year waived)
  • Earn rate: 1 Mile per $10 spent
  • Additional perks: The BMO World Elite Total Travel and Medical Protection package provides insurance including out-of-province/out-of-country emergency medical protection up to $2 million, trip interruption/delay, car rental collision damage coverage; free membership in Mastercard Airport Experiences provided by LoungeKey, with exclusive VIP access and four annual complimentary passes; purchase protection and standard warranty

Click here for more details about the BMO Air Miles World Elite Mastercard*


Best for low interest

MBNA True Line and MBNA True Line Gold Mastercard*

Cash back and rewards are all fine when you’re in the black but priorities shift when you’re holding a balance. With typical credit card interest rates at around 20%, even a modest amount of debt can add up quickly. The very best way to tackle this problem is to nip it in the bud, and one way to do that is to transfer your debt to a low interest card. That’s where the MBNA True Line and MBNA True Line Gold come in. Both cards have low regular purchase rates (12.99% and 8.99% respectively) and promotional balance transfer rates (0% for 12 and six months, respectively).

MBNA True Line MasterCard*

  • Card type: Low interest
  • Annual fee: $0
  • Additional perks: Discounts at Avis and Budget Rent A Car; up to 9 authorized users for no extra charge

Click here for more details about the True Line MasterCard*

MBNA True Line Gold MasterCard*

MBNA True Line Gold credit Card

  • Card type: Low interest
  • Annual fee: $39
  • Additional perks: Travel coverage including accident and trip cancellation; theft, damage, personal effect and accident insurance for car rentals; extended warranty and purchase protection

Click here for more details about the True Line Gold MasterCard*