Costco-Visa Partnership: How the Change From Amex Will Affect You

How will the end of the Costco-American Express credit card affect you?

On June 20, Costco Wholesale officially switches from the expiring Costco American Express card to the Costco Anywhere Visa by Citi credit card. The move comes after a March 2015 announcement that Costco and American Express are ending their 16-year partnership.

With the arrival of the new Costco credit card, cardholders can expect changes to their rewards and other perks. Here’s a look at what’s new with the Costco Visa card.

See: 10 Things That Happen When You Don’t Use a Credit Card

Why Costco Dropped American Express

The Costco-American Express split is reportedly due to a disagreement over terms when the two were renewing their partnership.

Cutting costs is one of the major motivations for Costco switching to Visa. American Express charged Costco a 0.6 percent fee on each purchase. With Visa, Costco will incur fewer fees.

Another motivation for Costco to move to Visa is to increase reach. American Express cards are not as widely accepted as Visa credit cards. The new Visa credit card will also offer greater rewards, including 2 percent cash back on non-gas purchases from Costco and The American Express Costco card offered 2 percent cash back on eligible travel purchases at Costco and 1 percent cash back on other Costco purchases.

How the Costco Visa Card Affects Customers

Costco’s contract with American Express ended March 31 and its partnership with Visa began April 1. On June 20, Costco’s Amex card will no longer be accepted. Here’s what else you can expect:

1. New Visa Card Sent by Mail

Costco-American Express cardholders will get a new credit card, the Costco Anywhere Visa Card, in the mail automatically. The new Costco Visa card will be ready to use on June 20.

2. Increased Rewards

Costco Visa cardholders will get more points in cash rewards than before with American Express. Cardholders will earn:

  • 4 percent cash back on eligible gas purchases, such as at Costco, for the first $7,000 per year
  • 3 percent cash back at restaurants and on eligible travel purchases worldwide
  • 2 percent cash back on other purchases at Costco and
  • 1 percent cash back on all other purchases

3. Steps Cardholders Need to Take

Although much of the changeover from American Express to Visa is automatic and seamless, there are some manual elements to take. For example, you must inform merchants that automatically bill your Costco credit card of your new card. You’ll also need to set up AutoPay through Citi if you want your monthly Costco card statement to be paid automatically.

Costco Visa vs. Costco Amex

The Costco Visa credit card and the Costco American Express share many of the same benefits. But the new Costco Visa card has the upper hand on cash back rewards. Besides earning more points per purchase than the Costo Amex card, the Anywhere Visa card is accepted more widely, meaning cardholders have more opportunities to earn cash back. 

For now, Costco members can continue to use their Costco card from American Express — right up through June 19. After that, Visa will be the new co-branded credit card for Costco. Although experts say there might be some bumps in the switch to Visa, it’s difficult to deny the change is a boon for Costco members.

Editorial Note: This content is not provided by American Express. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone and have not been reviewed, approved or otherwise endorsed by American Express.