AAdmiral

And neither did I. I guess that blows a hole in my theory. I think then that JPM Chase will benefit the most from Costco only accepting the VISA card as they issue more VISA cards in the USA then any other bank. Instead of pulling out my Amex and Costco membership card, I'll pull out my JPM Visa and Costco card.

mia

I am not a Costco shopper. Doesn't the co-branded credit card also function as a membership card?

AAdmiral

Yes the co-branded AMEX Costco card is a two in one credit card and membership card and so will the Citi VISA card be once Costco transitions to VISA from AMEX. What I meant was, it won't make a difference if I use my AMEX card or JPM VISA card at Costco as I have Costco Executive Membership. I will just substitute one form of payment for another.

rgAAFT

That's new... Just for reference, was it a fraudulent charge or was it an over charge due to involuntary DCC? Mine was the DCC scenario, and the Chase reps were an absolute nightmare to deal with.

krazykanuck

Yes, but it doesn't have to. You can opt for another method of payment if you want.

The fact that it's Visa makes me think I might wind up keeping my Costco membership when it renews later this year. If it were MC/Discover, I'd likely drop it since its the same payment method as Sam's.

ocdb8r

I think you're both missing the crux of the argument. It's exactly BECAUSE Citi doesn't benefit from Visa exclusivity (in the same way Amex did) that should compel them to make the offering more competitive. Amex knew they'd get a cut of all spend at Costco no matter which card was used. That means they could offer whatever they felt like on the Costco branded card because no matter what, an Amex was the only credit card that could be used at Costco.

Citi on the other hand has no such guarantee of getting a cut of Costco spend given the plethora of Visa alternatives. So, their offering should theoretically be competitive with other Visa alternatives as the only inherent benefit the co-brand offers is being able to carry a single card for both membership and payment.

I agree that in reality, this may not translate to anything but I don't think you can say there's no room for discussion.

eajusa

Well then, it will be interesting to see the first quarterly report on Citi's profit from this new card. Personally, I hope Citi does well. I do not shop at Costco, but I like Citi's CS and their recent improvements in some of their cards.

mia

If I understand correctly, Costco credit cards pay out rewards once per year in the form of a coupon which is only valid at Costco, although it can be cashed out at a store. If we assume that this method is specified by Costco because it drives store traffic, I think it is safe to further assume that the Citi VISA will offer the same type of reward, and Citi could only change the cash back percentages and categories.

In this circumstance, I think Citi will look only at competing VISA cash back cards, not at cards which offer travel rewards. Citi itself issues a MasterCard which pays 2% for general spending. Is there any VISA cash back card which pays more than 2% for general spending?

garykung

Is it a CSP (or any card that has an AF)?

garykung

Based on current experience, it really depends on how you see it.

1. With or without the co-branded CC, you will still get a membership card regardless.

2. You are not obligated to use the co-branded CC for payments. For example, even you use your co-branded CC as proof of membership, you can still use other form of payment (like PRG, SPG, as well as cash, debit cards, even checks).

3. In order to have the co-branded CC, you must pay for Costco's membership regardless (so the membership fee is a form of AF for those people who don't shop in Costco).

4. Costco's membership fee is fully refundable at any time.

5. Each membership is entitled for 2 membership cards. Hence, 2 separate co-branded CC.

So the co-branded CC is simply a convenience for bringing 1 less plastic card.

Based on the Canadians' experience, it will be the same.

Costco's co-branded CC is not designed to be competitive. To Costco, it is a kind of benefit.

That's why the co-branded AMEX had only minor changes over years.

cbn42

(emphasis added)

That's a fair argument if you are only looking at Costco spend, but why should Citi care about that? They want to increase your total spend. If you get a Costco/Citi card and use it at other places, they make money anyway. There is no reason for Citi to try to get you to spend more at Costco in particular.

For Amex, this card drove sales because of the use of the Costco brand and the loyalty of its members, not particularly because of the rewards program. There were other Amex cards that paid the same cashback rate on Costco purchases. I don't expect Citi's card to be any different. Citi is essentially paying Costco for the right to put their name and logo on the card and access their membership list, just like they do with American Airlines and Hilton.

yugi

No, it wasn't a fraudulent charge. It was something that I returned, but the store didn't want to refund.

yugi

it's a CSP.

garykung

No wonder.

flyer4512

If you have an executive membership you get a cash back coupon on purchases regardless of how you pay.

I don't have a Costco Amex but I'm guessing you would get more rewards if you were to pay using that card.

I use 90% Costco cash cards purchased with Visa or MC online and 10% SPG AMEX for my payments @ Costco.