My Issues With The Costco Amex
I just received an email solicitation to apply for the Costco American Express card. The offer is for $150 cash back as a sign up bonus. I like Costco and I visit frequently, but I will not be applying for this card. Here is why:
1. The $150 is only if I make $1,000 in purchases at Costco in three months. Normally, meeting these minimum spending requirements is pretty easy for me. Even if I need to spend $2,500 in three months, like with the British Airways card, that isn’t all that much for someone who charges all day to day purchase and puts as many bills as possible on the card. I love Costco, but I don’t think that I would spend $1,000 in the next three months.
2. $150 is not really the greatest sign up bonus. In the last year, I received $1,000 from the Capital One Match My Miles offer, 1 free round trip plus $500 from Southwest Airlines, and of course the 100,000 British Airways miles. While the Capital One deal was straight cash, the Southwest and British Airways deals were worth far more than $150. Since you can only apply for so many cards, I choose to sit back and wait until I am offered something that is worth at least $500-$1,000 or more.
3. I really don’t like how this card distributes rewards. You get a voucher in the mail once a year. If you cancel your card or if they cancel on you before that date, you loose everything. Even if you do get your voucher, you have to go to Costco to use it. You can use it to make purchases at Costco or redeem it for cash. I would then have to visit my bank to deposit the cash. Call me crazy, but I was more than satisfied with the statement credit that Capital One gave me. It happens at the end of each month, and I do not have to drive all over town and wait in lines to claim it.
Some Other Weird Things About This Card
You get 4% cash back on gasoline at Costco or any other station, 3% back for restaurants, 2% for travel, and 1% for everything else including purchases at Costco. This seems to break all the rules of retail affiliated cards. The whole idea of the card is that the store wants to encourage you to there. Heck, Costco sells travel services, but it appears that you get a lower return rate if you from them over another travel agent!
What I Like About This Card
Most cards that offer high returns on gasoline specifically exclude warehouse stores like Costco. Costco does have some of the best prices around on gas, and 4% off of that is very good. Nevertheless, my families transportation strategy these days relies heavily on bicycles and a Prius, so thankfully, we don’t spend that much on gas anymore. I personally consume more orange juice than gas on most days : )
Three percent back on restaurants is also pretty good. For all my transportation frugality, I do have a weakness for eating out, so I probably should have a rewards card that gives me a bonus for dining out.
What You Should Do
I am not saying that this is a bad card. What I am saying is that there are plenty of other reward cards that offer a higher sign up bonus and better rewards than this one. If you are a heavy consumer of gasoline and you eat out a lot, this card might actually make sense for you. Just be sure you get the card with full knowledge of its terms. You wouldn’t be the first person to loose out on your reward check because you canceled the card, or they can canceled you, before receiving it.
