As of March 4, 2022, CIBC became the exclusive issuer of Costco credit cards in Canada. We break down if it’s really the best card for frequent Costco shoppers.
Photo by Mick Haupt on Unsplash
As of March 4, 2022, Costco has officially made the switch from the Capital One Costco Mastercard to the CIBC Costco Mastercard. Here’s what you should know if you’re considering this card—or have automatically been switched over from the Capital One card. Since opening its first Canadian warehouse store in 1985, Costco has become a staple shopping destination for people who want deep discounts on bulk buys. The catch? Costco requires a membership for you to shop there. (It’s $60 for a Gold Membership and $120 for an Executive Membership.) Once you have one, you can reap the benefits of the low prices it offers on everything from groceries, homewares, furniture, electronics and prescriptions to vacations, gas, tires and more. As you can imagine, the savings can be significant.
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Does Costco take Visa?
No. In fact, 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 and debit, Canadians can pay for their Costco purchases using any Mastercard. Previously, the store had one branded credit card—the Capital One Mastercard for Costco members. But as of March 2022, that partnership ended and CIBC acquired the existing Canadian Capital One Costco Mastercard portfolio, becoming the exclusive issuer of Costco credit cards in Canada.
So, is the new CIBC Costco Mastercard the best one to use in store? What are the alternatives? If you have the Capital One Mastercard, what happens now? Read on to learn the details of the CIBC Costco Mastercard and learn about seven of its most attractive alternatives.
What will happen to my Capital One Costco Mastercard card?
If you’re a cardholder of the Capital One Costco Mastercard, there’s no need to worry. Essentially, all eligible Capital One Costco cards will be transferred to the new CIBC Costco Mastercard. Your CIBC card should arrive before August 31, 22, but in the meantime you can continue using your the Capital One card as usual.
Once your new CIBC card is activated, you (and any authorized users) will no longer be able to use the Capital One Costco Mastercard. All of your previous card details (like card number and PIN) will remain the same, as does your credit limit. Your pre-authorized payments should not be interrupted, either. For more details on the transfer read this.
CIBC Costco Mastercard review
The new CIBC Costco Mastercard will remain a no fee cash back card, just like its Capital One predecessor. But, there are a few key changes. First, you’ll earn 3% cash back at restaurants and Costco gas stations (the Capital One card gave 3% back at restaurants but only 2% on gas). You’ll also get 2% cash back at other gas stations, which is handy when you’re on the go, and 2% back when you shop at Costco.ca. For all your other purchase categories, you’ll earn 1% cash back (including at Costco). This card also comes with mobile device insurance, with up to $1,000 of repair or replacement coverage when you charge or finance the price of a mobile device on your card. With certain eligible purchases, you can also get security insurance and extended warranty insurance. If you meet certain requirements, like an income of over $60,000 per year, you may qualify for the CIBC Costco World Mastercard, which is essentially the same card, but includes World Mastercard benefits like car rental insurance, travel perks and more.
However, there are a few drawbacks. While there is technically no annual fee, to truly reap the benefits of this card, it’s worth noting that you (obviously) have to have a Costco membership, which is upwards of $60 per year. Another point: there’s no limit on how much you can earn throughout the year. But, the cash back earn rate you receive does come with a cap. When you reach your annual spend in a certain category, you’ll still earn cash back—it will just be at the 1% rate for the remainder of the calendar year in that category. For gas, you will receive the 3% cash back rate (and 2% cash back rate at other gas stations) only on the first $5,000. After that, you’ll earn the 1% cash back rate. For Costco.ca purchases, the cap is $8,000 before you return to the 1% base rate. The way you can utilize the cash back might be considered a downside, too. While some cards pay it out monthly, straight on your statement or into your savings account, the CIBC Costco Mastercard gives it to you in the form of gift certificates, issued in January, that you can redeem for anything in the Costco warehouse.
While Costco’s official credit card benefits Costco members, there might be other Mastercard products, all of which can be used at Costco, that will better meet your needs. This no-annual-fee card doesn’t match the perks of some of the cards we’ll discuss below.
Earn rate: 3% cash back when you spend at restaurants and at Costco gas, 2% back at other gas stations and at Costco.ca, 1% on all other purchases (including Costco)
Welcome offer: Get a $20 welcome bonus when you make a purchase with your card and apply for Register with the CIBC Mobile Banking App or CIBC Online Banking before December 31st, 2022.
Income requirement: $15,000
Additional benefits: Mobile device insurance and extended warranty insurance. Your CIBC Costco Mastercard also doubles as your Costco membership card, so there is no need to carry both. You can also use the CIBC Pace It feature to create a payment instalment plan on Costco purchases.
For regular, in-store Costco purchases, you’ll earn 1.5% cash back—more than you will with the CIBC Costco card. Plus, like the CIBC card, this is also a no fee card with some solid benefits, like a robust suite of insurance products and access to airport lounges. That said, this card isn’t very accessible to many Canadians (the income requirement is $80,000 annually). If income requirement is a concern, we suggest considering the Tangerine card below.
Cardholders automatically get 2% back on purchases in two spending categories, with a third category made available when they set up an automatic rewards deposit into a Tangerine Savings Account, which also doesn’t have any fees. All other spending earns 0.5%. This means 2% cash back is available on purchases in up to three of the following categories: Groceries, restaurants, gas, drug stores, recurring bill payments, entertainment, public transit and parking, furniture, home improvement, and hotel and motel stays. You’ll have to double check which category Costco purchases fall under, but at the very least, you’ll still earn 0.5% there, and a solid earn rate on your other purchases.
Welcome offer: Earn 10% cash back (up to $100) when you spend $1,000 on everyday purchases within the first 2 months of having the card. Must apply before July 31, 2022.
Earn rate: 2% cash back in up to 3 spending categories of your choice from 10 different options; and 0.5% on all other purchases; cash back can be applied monthly, either to your credit card balance or deposited into your savings account
Income requirement: $12,000
Additional benefits: Purchase protection and extended warranties
The MBNA Rewards World Elite card offers cardholders an earn rate of 5 points per $1 spent at Costco (up to $50,000, combined with other categories). And when redeemed on travel, it works out to a very healthy 2% return. 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 car rentals.
Earn rate: Earn 5 points for every $1 spent on eligible restaurant, grocery, digital media, membership and household utility purchases until $50,000 is spent annually in the applicable category, and 1 point for every $1 on all other eligible purchases.
Welcome offer: For the first 90 days, you can get up to 30,000 points (approx. $245 in cash back): 10,000 for registering for paperless e-statements, 20,000 for spending $2,000 in purchases with the card. Plus, earn earn 5 points for every $1 spent on eligible restaurant, grocery, digital media, membership and household utility purchases. (Not available for residents of Quebec.)
Income requirement: $80,000 (personal) or $150,000 (household)
Additional perks: Car rental collision damage waiver; discounts at Avis and Budget car rentals; purchase assurance, price protection and extended warranty
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 $1 spent on restaurants and groceries (up to $5,000 annually per category), and 1 point per $1 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 bonus points on eligible grocery and restaurant purchases (up to 5,000 points). And more when you sign up for paperless billing.
Welcome bonus: For the first 90 days, you can get up to 10,000 points (approx. $50 in cash back): 5,000 for registering for paperless e-statements, 5,000 for spending $500 in purchases with the card. Plus, earn 4 points for every $1 spent on eligible restaurant, grocery, digital media, membership and household utility purchases. (Not available for residents of Quebec, instead click here.)
Earn rate: 2 points per $1 spent on groceries and restaurants ($5,000 max annual spend per category); 1 point per $1 on everything else
Travel perks: $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
If 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 the BMO Air Miles World Elite Travel and Medical Protection. However, for Air Miles collectors, it’s the eye-catching 1 Mile per $12 earn rate that is of interest (and three times the Miles at Air Miles partners). Also, the welcome bonus of 2,000 Air Miles is sweet, too ($310 value). 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. Two more features worthy to note: Complimentary membership in Mastercard Travel Pass provided by DragonPass, and an exclusive 25% discount on one worldwide Air Miles flight redemption during the calendar year.
Welcome bonus: Earn 2,000 bonus Air Miles ($210 value) when you spend $3,000 on purchases within the first three months
Earn rate: 1 mile per $12 spent (three times the Miles at Air Miles partners)
Perks: Complimentary membership in Mastercard Travel Pass provided by DragonPass, exclusive 25% discount on one worldwide Air Miles flight redemption during the calendar year, and 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; purchase protection and standard warranty
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