Costco Signs With Citi & Visa – What Does It Mean & What Happens to Existing Cardholders?

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Photo by Mike Mozart

Costco & Citi Form Partnership

Last month I wrote about Costco and American Express ending their 16 year partnership. The news was a big blow to American Express (and their stock price) and left many wondering who the giant retailer would partner with next.

When a similar deal ended recently in Canada, Costco chose to partner with Capital One and Mastercard. I thought it may be reasonable that they would do something similar here, although Capital One just never seemed like a great fit.

A New Partnership Announced

citi logo

Today Costco has announced that they will be partnering with Citi and Visa beginning on April 1, 2016. According to the press release, “Under the terms of the agreements, Citi, the world’s largest issuer of consumer credit cards, would become the exclusive issuer of Costco’s co-brand credit cards and Visa will replace American Express as the credit card network for Costco in the United States and Puerto Rico beginning April 1, 2016.”

In regards to the new co-branded credit card, “Once issued, Costco’s co-brand Visa credit card would provide generous rewards to Costco members, serve as the Costco membership card, and would be accepted at Costco locations in the United States and Puerto Rico, as well as all merchants worldwide that accept Visa credit cards.

Last month when the news broke I also speculated that American Express might re-brand the current Costco cards to one of their own products. It seems that was incorrect and Costco has confirmed that Citi will purchase the existing co-branded credit card portfolio. “The implementation of these agreements is subject to the purchase of the existing co-brand credit card portfolio by Citi.”

Analysis

Since Sam’s Club has partnered with Mastercard here in the United States, this move doesn’t come as a huge surprise. Unlike Chase, Citi has struggled to pick up more affluent clients, so this seems to be a good move for them and one they no doubt paid a lot of money for.

I am a little surprised that the entire co-branded credit card portfolio is being sold by American Express, although this was probably stipulated in their original contract. If you currently have the co-branded card, look for American Express to encourage you to apply for another one of their products before the end of the contract.

Conclusion

This is an interesting move for Costco and one that I think is a net positive for members. Since most people carry a Visa card in their wallets, this makes shopping at Costco more convenient. I am really interesting to see how generous the co-branded card will be. I suppose we will have to wait awhile before we hear more.

HT: FlyertalkerinA2 on Twitter


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12 COMMENTS

  1. I’ve had the co-branded “fake platinum” costco card for like 15 years. AMEX nevers seems to show me much “love” on this card. They give me weak bonus offers and are the only card company that has declined me when I apply for other products even with a score around 800. It will be interesting to see how much “love” they have to share with me on this. I have never gotten any of the real Platinum benefits and it doesn’t even include a free membership to Costco. Citi “loves” me already but I can’t imagine applying for the Costco Citi card at this point.

    • It is impossible for me to image that you got declined by Amex with 800 credit score. I received at least 3 offers each year from Amex for the past four years. I really regretted that I did not response to the generous off of 100K MR sign on invitation a couple year ago since I am not very enthusiastic to apply any new credit card back to that time. I only got a 75K MR offer now.

  2. I had hoped they would partner with Discover. Oh well. I have several Visa cards already, so now no need to get the Costco branded one. Time to sever remaining AmEx ties anyhow.

    • Is Discover even around? I don’t know anyone that carries it and don’t really consider it a viable card.

      One interesting fact that many might have missed. Costco has been accepting Visa for years on their website. I often use my VISA to buy Costco cash cards that I use for purchases at the store and for gas.

      • Some people used that as a backdoor way to manufacture spend. By something expensive online with a Visa and then return to the store. Since the store cannot return to a Visa, they will issue a check. Not something I have tried, but a lot of people have done it.

  3. I am writing an email to SPG as I post this to encourage SPG to drop Amex when an opportunity comes up. Costco and SPG were the only reasons I have kept Amex. They are the worst credit card issuer and I would love to walk away.

    • Please let me know what is good for SPG? It is one spg point per one dollar. I have looked at SPG a few times and have no idea what is so good for SPG beside amex offer. Spg even have a 3% foreign transaction fee that make it not much useful to me since one quarter of my charges are from overseas.

      I have a Boa travel visa 2.625% back for everything and no foreign transaction fee. 4.125% back if I book flight, hotel, or cruise from BoA travel site. To me, that is good enough.

      Of course, I don’t mind to get a few signon bonus from time to time. I might consider to apply SPG Amex if the signon bonus back to 30K or more.

  4. @Jonathan, the major benefit of SPG points (as I see it) is that if you transfer in increments of 20,000 points, you get 1.25 air miles for every 1 Starwood point. So if you transfer 20,000 points to American Airlines, for example, you’ll get 25,000 AA points.

    • Ok. If the major benefit of SPG points is to get 1.25 air miles for every 1 Starwood point. I will apply CitiBusiness® / AAdvantage® Platinum Select® World MasterCard® every 12 months. Most of the time there will be a 50,000 AA miles promotion after making $3,000 in purchases. I will got 53,000 or more AA miles after $3,000 spend each year.

      Since Costco will be partnering with Citi and Visa next year, probably Citi will also issue a CitiBusiness® / AAdvantage® Platinum Visa card in the near future.

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