Leaked Details on Costco-Citi Credit Card Rewards

Starting in April 2016, Costco will start a new partnership with Visa and Citi; only Visa credit cards will be allowed at the warehouse and Citi will issue a Costco cobranded credit card under the Visa network. More details are emerging regarding the rewards structure of the new credit card and it appears it will mirror entirely the current Amex cobranded Costco credit card.

On sec.gov there is a long agreement between Costco and Citi. Somewhere towards the end (page 111), the details of the rewards program are released.

Personal credit card details

• No annual fee (you do need Costco membership though)
• 3% on the first $4,000 of gas, 1% thereafter
• 2% on travel and at US restaurants
• 1% on all other purchases including Costco

Business credit card details

• No annual fee (you do need Costco membership though)
• 4% on the first $7,000 of gas, 1% thereafter
• 2% on travel and at US restaurants
• 1% on all other purchases including Costco

In other words, it’s the exact same details as the current Amex cobrand. It’s possible there will result in some differences regarding exactly how Visa and Amex categorize travel or gas (e.g. 7-Eleven), but the basic reward structure is identical. Even the reward redemption is exactly the same with an annual coupons issued for all the rewards which is redeemable at Costco.

It’s surprising that they didn’t change it around a little to add some excitement.

Other points:

• On page 1 it says that the agreement was made on February 27, 2015
• On page 45 it mentions clearly that the agreement takes effect on April 1, 2016
• On page 10 Citi needs to create a special BIN for the Costco card so that it’s identifiable by its numbers
• On page 7 it’s noted that Citi can’t use any non-plastic card (e.g. NFC) without Costco’s consent
• On page 38 there’s a list expenses which will be covered entirely by Citi

Existing Costco Cardholders

It’s also clear in the agreement (page 7 and 9) that Amex Costco cardholders will automatically transition to the Citi-branded card, something we’ve mentioned in the past, and that these transitioned cards will have the same reward details as new cards.

If you have an Amex card, there is mention on the Amex website that there may be an option of product-changing your card to a different Amex card, so you’ll end up with 2 cards if you take up Amex on their offer.

Here’s a quote regarding the rewards (page 111):

Consumer Card Loyalty Program (Cash Rebate portion only)

Co-Branded Cardholders will earn an annual reward based on the eligible purchases on their Co-Branded Card from Costco and Citi during an annual reward period. An annual reward period is 12 billing periods, starting with the one that begins in February. Eligible purchases are purchases for goods and services minus returns and other credits. Eligible purchases do NOT include fees or interest charges, balance transfers, cash advances, purchases of traveler’s checks, purchases or reloading of prepaid cards, or purchases of any cash equivalents. Additional terms and restrictions apply. Co-Branded Cardholders will earn an annual reward of: 3% on the first $4,000 of purchases each annual reward period (1% thereafter) of gasoline at Costco and at gas stations located in the U.S. (excluding superstores, supermarkets, convenience stores, and warehouse clubs other than Costco); 2% at restaurants located in the U.S.; 2% for eligible travel purchases (eligible travel purchases are: airfare for a scheduled flight on a passenger carrier, hotel stays (excluding timeshares, banquets and events), car rentals from select major car rental companies listed at https://www.cardbenefits.citi.com/, and other purchases from Costco Travel, cruise lines, travel agencies and tour operators); and 1% on all other eligible purchases, including at Costco.

Merchants are assigned codes based on what they primarily sell. A purchase will not earn a higher percentage reward if the merchant’s code is not eligible. Purchases made through a third-party payment account or on an online marketplace (with multiple retailers) will not earn a higher percentage reward. A purchase may not earn a higher percentage reward if the merchant submits the purchase using a mobile or wireless card reader or if the Co-Branded Cardholder uses a mobile or digital wallet.

Small Business Loyalty Program (Cash Rebate portion only)

Co-Branded Cardholders will earn an annual reward based on eligible purchases on their small business Co-Branded Cards from Costco during an annual reward period. An annual reward period is 12 billing periods, starting with the one that begins in February. Eligible purchases are purchases for goods and services minus returns and other credits. Eligible purchases do NOT include fees or interest charges, balance transfers, cash advances, purchases of traveler’s checks, purchases or reloading of prepaid cards, or purchases of any cash equivalents. Additional terms and restrictions apply. Co-Branded Cardholders will earn an annual reward of: 4% on the first $7,000 of purchases each annual reward period (1% thereafter) of gasoline at Costco and at gas stations located in the U.S. (excluding superstores, supermarkets, convenience stores, and warehouse clubs other than Costco); 2% at restaurants located in the U.S.; 2% for eligible travel purchases (eligible travel purchases are: airfare for a scheduled flight on a passenger carrier, hotel stays (excluding timeshares, banquets and events), car rentals from select major car rental companies listed at https://www.cardbenefits.citi.com/, and other purchases from Costco Travel, cruise lines, travel agencies and tour operators); and 1% on all other eligible purchases, including at Costco.