CostCo Offering New Credit Card In Effort To Boost Membership
By Christine Kern, contributing writer
Analysts say new Visa card will drive more customer visits and offers more rewards.
Costco announced last year that it planned to end its sixteen-year relationship with American Express in favor of a new agreement with Citi to offer a new store-branded Visa Card. Now, that new “Costco Anywhere Visa Card by Citi” doubles as a membership card for Costco shoppers and will have an even better cash-back program in order to enticed more customer visits and increase memberships, according to CNN.
The New Costco Visa, which is accepted anywhere Visa is taken, gives shoppers 4 percent back on the first $7,000 worth of gasoline purchases, and 1 percent above that. The old Costco American Express card had just a 3 percent reward on the first $3,000 of gas. The new card also offers 3 percent cash back on all eligible restaurant and travel purchases, an increase over American Express’ 2 percent reward. Additionally, consumers earn 2 percent back at Costco and Costco.com, and 1 percent back on all other purchases.
Nomura Securities analyst Robert Drbul told Fortune that the better benefits of the card would bring in more customers and help Costco stand out from other retailers, writing: “We believe the improved rewards program has strong potential to drive this card to top-of-wallet for many consumers, which should also benefit Costco.”
The new card could also help Costco battle Sam’s Club and other competitors for customers. Sean McQuay, credit card expert for Nerdwallet, told the Chicago Tribune that the Visa card could entice people who aren’t currently Costco shoppers.
Virginia McGuire, of NerdWallet, stays that the new Costco Visa card, issued by Citi, is among the best cash-back offers of any card currently on the market. “If you spend a lot on gas, restaurants and travel ,this card has pretty great rewards,” she wrote. Though the new card does not have an annual fee, users do need to maintain a Costco membership (which start at $55 annually) and all rewards must be redeemed at a Costco store.
McGuire stated, “The Costco card is kind of an anomaly. It isn’t exactly a store credit card in the traditional sense, because you can earn rewards at any store that accepts Visa. But you do have to redeem those rewards at Costco (for merchandise or cash) and maintain your club membership. That means the company is ensuring you’ll be a loyal shopper if you apply for a credit card.”
Even as Costco was unveiling its new branded credit card, Walmart announced that it is expanding the rewards for its own family of store-branded cards. Now, the retail giant has announced the introduction of a new tool for Walmart Credit Card and Walmart MoneyCard holders that allows them to “keep more money in their pocket. It’s as easy as 3-2-1.” Called 3-2-1- Save, the new simplified rewards value proposition brings even more value to customers’ everyday purchases with their Walmart cards issued and administered by Synchrony Bank and Green Dot Bank.