Costco to partner with Visa, Citi after AmEx deal ends

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SEATTLE – Citigroup Inc. will become the exclusive issuer of Costco’s credit cards and Visa Inc. will replace American Express as the credit-card network for Costco’s stores starting in 2016, the retailer announced Monday.

AmEx has been the only credit card accepted at Costco for the last 15 years. The deal had been a boon for both companies, analysts said, but they ended their partnership last month.

The Costco partnership represented 8%, or $80 billion, of AmEx’s billed business and about 20%, or about $14 billion, of its interest-bearing credit portfolio, Richard Shane of JP Morgan Chase & Co told The Times last month.

Under the new agreement, transactions will be processed by Visa, and Citi will become the exclusive issuer of co-branded credit cards on April 1, 2016.

The membership-only business otherwise accepts only cash or debit cards.

The deal is subject to the purchase of Costco’s existing co-branded credit card portfolio by Citi, Costco said in a statement.

The retailer expects the existing portfolio to be sold, spokesman Bob Nelson said. When that happens, existing Costco members will have their new cards sent to them.

“The details of that will come out down the road,” he said.

The new cards will provide rewards to Costco members, serve as membership cards and would be accepted at merchants worldwide that accept Visa credit cards.

Costco will accept other Visa cards under the new agreement.

The current AmEx-Costco deal provides members with 3% cash back at gas stations, 2% cash back at U.S. restaurants and some travel purchases, and 1% cash back on other purchases including Costco purchases.

Staff writers Dean Starkman and E. Scott Reckard contributed to this report. 

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1 Comment

  • Mike Chan

    So the best card to use at Costco used to be the Fidelity AmEx for 2%. (I never understood why people were so hot on their TrueEarnings Card from Costco and American Express which only earned 1% at Costco.)

    Starting April 1st of 2016, some of the best cards to use at Costco will be:

    1. BankAmericard Travel Rewards Visa which can earn 2.625% toward travel if you qualify for Bank of America’s Preferred Rewards Platinum Honors status. (Or 2.25% with Platinum status or 1.875% with Gold status or 1.5% with no Preferred Rewards status.)

    2. Citi DoubleCash Card 2% cash back. This is usually a MasterCard, but can also be a Visa or even Visa Signature.

    3. Capital One Venture Visa which earns 2% toward travel.

    4. U.S. Bank FlexPerks Travel Rewards Visa Signature card which earns about 1.66% toward travel on spending at Costco and about 3.32% on cell phone as well as either gas, grocery stores, or airfare, whichever you spend the most on each month.

    5. Capital One Quicksilver Visa which earns 1.5% cash back.

    You might also want to try the reward calculator at CreditCardTuneUp. com to see which Visa cards will earn you good rewards for your Costco spending and other expenses. The calculator factors in bonuses and annual fees as well.

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