Costco's New Credit Card Expected To Bring In More Customers Than Before
Costco, America's largest membership-only warehouse club recently announced that it was ending its exclusive partnership with credit card company American Express. Starting June 20, Amex will no longer be handling the retailer's credit card network. Instead, Costco has struck a deal with Citi who will issue a new credit card called "Costco Anywhere Visa Card by Citi." According to a report in Fortune, the card will also serve as the membership card for Costco members. Citi will start sending out the cards to existing members in May, so that they will be able to use it come June 20.
The Fortune also cited what some analysts are saying about this recent move. Analyst Robert Drbul told Fortune that the new card will likely "bring in more customers and help Costco stand out from other retailers." The reason for this is that the card has a much better and more attractive program than the one with Amex. The new Citi card offers a bigger cash back guarantee of 4% for gas expenses of up to $7,000, compared to the previous 3% for only up to $4,000 with Amex. For restaurants and travel expenses, the Citi card offers 3% cash back which is a point higher than the offer with Amex. Members do not need to pay an annual fee for the credit card so long as they pay their $55 annual membership fee for Costco.
Drbul said that the "improved rewards program has strong potential to drive this card to top-of-wallet for many consumers, which should also benefit Costco."
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Another expert in credit cards, Sean McQuay of Nerdwallet said that the card's generous cash back rates may likely convince people to become Costco members, if they are not yet, which is good for Costco's membership-only business. Costco is currently working on keeping its members happy to prevent from moving to other membership-only clubs such as Sam's Club.
