Costco announced today that they struck a new partnership with Visa and Citi. Costco will accept only Visa-branded cards starting April 1, 2016, and Citi will offer a Citi/Costco partner credit card, similar to the AmEx/Costco product available currently.
A couple of weeks ago it was finalized that the current Costco, American Express agreement will end March 31, 2015. Speculations ensued over who Costco would partner with. Some mentioned the precedent of Costco Canada who also severed ties with AmEx and went on to partner with Mastercard and Capital One. Today it comes to light that US Costco will be partnering with Visa and Citi.
Under the new deal, only Visa cards will be accepted at Costco beginning in April 2016. Citi will offer the Costco partner card which is currently offered by American Express. All Visa cards will be accepted at Costco, no need for the Citi Costco card specifically.
There may be a small overlap period which Amex cards will still be accepted in April 2016. Also, debit card acceptance won’t change with the deal. All Visa and Mastercard debit cards will be accepted, as is the current rule as well. Citi Mastercards won’t be accepted, since only Visa cards will  be accepted. Most Citi cards are Mastercards, but they do have a few Visa-branded cards, and of course the new Citi Costco card will be Visa-branded as well.
No word yet what the reward structure of the new Citi Costco card will be. The company said that details will be made available to members soon.
We’ve written what we think will happen to current AmEx Costco cardholders, though there’s no official word on this from AmEx yet. We think the cards will be converted to Blue Cash cards or Amex Everyday cards. See also, Should You Sign Up For American Express Costco Credit Card Before The Relationship Ends?
We’re seeing a strong push by Citi into strengthening their credit card portfolio, with this Costco deal another step in that direction.
Great! Citi’s Double Cashback is a Mastercard and I can’t use this at Costco come next year. So far it’s easy to get the 2% there with the FIA Amex…
You can always buy Costco gift cards online with whatever credit card you like.
Good point! That’s what I actually did the last 2 times I went there. The good thing is you don’t even need to be a Costco member to shop when you have a GC 😉 Although I did renew my membership now as it’s always a hassle to go to the CSD before you can go shopping and have them give you that temp pass.
If you aren’t a member do you still get access to their coupons?
That’s probably what I’m going to do next year as the main reason I originally got the Fidelity Amex was to use at Costco. Unfortunately by the time I got around to signing up for the Priceline Visa 2% card it lowered it to 1%. I’m just curious are people still grandfathered in to the 2% cash back rate?
I believe I saw that they are. But I don’t have the card myself.
The press release today noted that this deal was based on Citi buying the existing co-brand portfolio from American Express. It looks like existing cardholders will be converted to Citi.
Interesting, thanks for the heads up Shawn.
Thanks, I missed that.
I do see on WSJ (http://blogs.wsj.com/totalreturn/2015/03/02/costco-to-accept-visa-credit-cards-next-year/) that Amex is going to try to get Costco cardholders to do a product change. Not sure if WSJ is wrong or if it’s more complicated.
It sounds like canceling the Costco Amex may be necessary so as to avoid any promotional losses by default. If the Costco Amex rolled over to another card then that may prevent one from participating in a promotion offer. Any thoughts on this thinking?
I am thinking that a co-branded Citi/Costco card may come with a small promotional offer, but not until after a period of time. When I signed up for the Costco Amex it did not come with any promotion, but over the years I have seen in-store Costco promotions/incentives to sign-up. My thought is to wait a bit and see if anything comes of it.
Interesting. I’m not a Costco member and I hadn’t realized they give promo signup bonuses. I assumed it’s just what’s online, which doesn’t have a signup bonus. Good to know.
As for converting Costco Amex to a different Amex: if you already got the bonus on the Blue Cash, for example, and you convert your Costco to Blue Cash, you won’t be losing anything.