Readers have been full of questions about the new Citi Costco Anywhere Visa: What does it mean for credit scores? How do the rewards bonuses work? What are the fees and interest rates?
The wharehouse club has shifted its rewards credit card agreement from American Express to Citi and Visa. As of June 20, 2016, those American Express Costco cards no longer work. Costco – which previously accepted only American Express cards for credit payments – now accepts only Visa cards.
New Citi Costco Anywhere Visas have been sent to American Express Costco cardholders and prospective cardholders can apply for the new card by calling Citibank at 800-970-3019.
We’ve answered the most-common reader questions about the new cards and transition.
Q: What is the APR of the new card?
A: If you were an American Express Costco card holder who was switched to Costco Visa, the specific terms and conditions of your new account should have arrived with your new Citi card. Your interest rates and payment due dates should be similar to your old ones. According to Citi, “If the initial letter you received from Citi listed your standard purchase APR as 15.49 percent, and your current APR for new purchases on your Costco card from American Express is less than this, then you'll keep your current APR for new purchases made with your Costco Anywhere Visa Card by Citi.”
If you apply and are approved for the Citi Costco Anywhere Visa as a new account holder, your card's APR will be 0 percent for seven months and 15.49 percent thereafter, according to Costco's website.
Q: Will the automatic payments and billing I set up on my American Express Costco card transfer over to my new Visa card account?
A: No. You’ll need to share your new card information with merchants that automatically billed your old Costco card account and with any online payment accounts where you saved your old card’s information. An automatic Costco membership fee payment arrangement will also have to be re-established under your new Costco Visa card.
And, if you had automated monthly payments made to your American Express Costco card account, you’ll need to sign up for Citi’s AutoPay services after your new Costco Visa arrives and you’ve register for online account access.
Q: What happens to the balance I had on my American Express Costco card?
A: Any balance on your American Express Costco card was automatically transferred to your new Citi Costco Anywhere Card on June 20, 2016.
Q: Will my card’s payment due date be the same after June 20, 2016?
A: According to Citi, it will be the same, or close to, your previous payment due date. You will have the option of choosing your own due date via Citi Online or calling the customer service number listed on the back of your new Costco Visa card.
Q: Do all gas station purchases earn a 4 percent cash back?
A: No. When the card was announced, one of the featured benefits is that it receives 4 percent cash back on “eligible gas.” When you read the details of the program terms, though, it says this: “You will only earn 1 percent cash back, not 4 percent, for gas purchased at superstores, supermarkets, convenience stores and warehouse clubs other than Costco or for fuel used for nonautomobile purposes.”
That has set off some alarm bells, given that 80 percent of all fuel in the U.S. is sold at convenience stores, according to the Association for Convenience & Petroleum Retailing, a trade group.
However, you shouldn’t worry. Here’s why: Card companies know what type of merchant you are charging at only via the merchant category code (MCC) that the card networks assign to individual businesses. Visa has separate codes for miscellaneous food stores/convenience stores (5499), service stations (5541) and automated fuel dispensers (5542). Supermarkets and warehouse clubs also have separate codes. Citi does not control how merchants are coded.
Citi confirmed that the Costco Anywhere Visa Card will give 4 percent at merchants classified as gas stations. In practice, most places where you pump gas are coded as gas stations, not as convenience stores – even if they are affiliated with a convenience store that offers the usual array of gum, lottery tickets, old-looking hot dogs and cold beer.
So rest easy. Your gas purchases probably qualify for the 4 percent cash back (and the purchases of hot dogs and cold beer at those places probably do, too).
Q: Are there limitations on restaurants?
A: Yes. The program terms state, “You will only earn 1 percent, not 3 percent, for purchases made at bakeries and certain restaurants/cafes inside department, grocery or warehouse clubs.”
Again, it will depend on which merchant category codes qualify for the 3 percent and how a particular eatery is coded. There are separate MCCs for bakeries, bars/lounges and restaurants. The reason some purchases at cafes and restaurants inside department stores and grocery stores might not qualify is because those locations are often coded as department and grocery stores, not as separate restaurants.
Q: Will I lose the rewards I’ve earned on my American Express Costco card after the switch?
A: No. Cash back rewards earned before June 20, 2016, that were not previously paid out will be automatically transferred to your new card soon, if they haven't been already. However, if you earned Membership Rewards points on your old American Express card, any that were not redeemed before June 20, 2016, won't be transferred to your new Citi Visa card.
Q: Are there foreign transaction fees on this new card?
A: Yes. Costco says there will be a 3 percent fee on transactions made in a currency other than U.S. dollars, which is a typical amount for cards with foreign transaction fees. If you're traveling abroad, you'd be well advised to use a no-foreign transaction fee credit card.
Incidentally, if shopping at warehouse clubs figures into your vacation plans, Costco says there is no foreign transaction fee for charges at foreign Costco stores, although not every foreign Costco accepts Visa cards.
Q: I recently received my American Express Costco statement with the full executive annual fee of $110. Why did was I charged the full fee if I won't be able to use the card going forward?
A: Remember that although the American Express card went away in mid-June, your Costco membership is a fee charged annually that allows you to buy things at Costco for a whole year.
The card has no annual fee. However, the Costco membership is an annual fee that is charged to the affiliated credit card, if you have one.
The date of your Costco membership renewal will stay the same. You will not be charged when the new Citi Visa is issued. Rather, you will be charged in a year.
Q: Did anything about Costco’s Executive Membership program change on June 20?
A: Costco says this card switch has no effect on its Executive Membership program.
Executive Membership, which costs $110, earns you 2 percent back on all purchases at Costco regardless of how you pay. An ordinary membership is $55, so if you spend at least $2,750 annually at Costco, the Executive Membership will pay for itself.
Today, post-network switch, you can earn even greater rewards by combining a rewards-earning Visa card with an Executive Membership.
Q: When will authorized users receive their new Citi Visas?
A: Authorized user cards were sent out with primary cardholder cards, a process that started at the end of May. However, note that any authorized user spending limits set for additional Costco American Express cardholders will have to be re-set for their new Citi Visas by the primary cardholder starting June 20, 2016.
Q: I don't want another Visa Card. I already have one. Can I use my non-Citi Visa card at Costco?
A: Yes. As of June 20, 2016, Costco accepts any Visa credit card in its stores – not just the Citi Costco Anywhere Visa.
Q: Will the credit history associated with the old card transfer over?
A: Ordinarily, if you close an account and open a new one, you would experience a slight, temporary reduction in your credit score. Typically, that’s not a big deal – unless you’re in the middle of buying a house or car, where having a higher score can help secure a better interest rate.
This case, though, appears to be different, according to CreditCards.com’s credit expert, Barry Paperno. He says, “From what I've read, there will be absolutely no scoring impact from this change, since essentially the same trade line will remain for the account with the only change being the card company name. … The former American Express account will not appear as closed, and there will be no impact on age of accounts, utilization or any other scoring factors. All in all, it will be as if that American Express trade line never existed and the Citi one has been there since the beginning of the account.”
Additional information is available on the Costco, Citi and American Express websites.
See related: What to do when your retail store card switches banks
