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Costco Credit Card Switch: Are Customers Losing Out?

Oct. 16, 2014
3 mins
A woman reads out her credit card details as a man types the information into a laptop

Costco did a bit of card shuffling back in September, when it announced it would no longer be accepting American Express cards at its Canadian stores as of January 1, 2015. Previously, Amex was the only credit card accepted at Costco and together the companies offered a partnership card called TrueEarnings, now discontinued.

The change-up is specific to Canada and comes after the companies were unable to reach an agreement ahead of their contract expiry at the end of December. In a phone interview with The Globe and Mail, David Barnes — a spokesman for Amex in Canada — said “The terms of the contract was up, Amex and Costco entered into negotiations and were unable to come to terms. This is very specific and exclusive to Canada.”

How does the news affect Costco customers? TrueEarnings cardholders are being switched over to the new Amex SimplyCash card and MasterCard will now be the accepted credit card at Costco Canada stores. Those being migrated over will not lose their Costco membership. As for a partnership card, Capital One Financial Corp. will be offering a new no annual fee MasterCard exclusively to Costco members that will also serve as their Costco membership card.

Costco Card Comparison: TrueEarnings vs. SimplyCash

How does the new Amex SimplyCash stack up to TrueEarnings? Here’s a breakdown:

TrueEarnings (Discontinued)

  • 3 % cash back on eligible restaurant purchases
  • 2 % cash back on eligible gas purchases
  • Up to 1% cash back on everyday purchases
  • Free supplementary card (for a current member on a member’s Costco account)
  • Show your TrueEarnings Card for entry into any Costco warehouse, use it to pay for your purchases

SimplyCash (note: there is a no-fee and a “Preferred” version)

  • 5% cash back on all eligible purchases at gas stations, grocery stores and restaurants in Canada (up to $250 cash back) for the first six months of membership
  • 1.25% cash back on all other purchases and when the welcome rate ends (NOTE: The preferred version earns 1.50 per cent after the welcome rate, but charges a $79 annual fee).
  • No limit to the amount of cash back you can earn on purchases after the first six months of card use (cash back is capped at $250 and $400 for the no-fee and Preferred cards respectively during the Welcome Period).
  • No annual fee for supplementary cards

Capital One Platinum MasterCard for Costco members

  • 3% cash back on restaurant purchases
  • 2% cash back on gas purchases
  • Up to 1% cash back on all other purchases
  • Doubles as a Costco membership card
  • No annual fee

Which Card is Better?

During the initial six-month Welcome Period, the Amex SimplyCash trumps the old TrueEarnings with one of the highest rewards earning rates on the market. It's after the initial six-month period that the cards are comparable; the TrueEarnings held greater earning potential on restaurant and gas purchases, while the SimplyCash options offer greater earning flexibility. Here's our breakdown of each card's cash earnings potential, assuming a $1,000 spend each on gas, restaurant and everyday purchases.

The verdict: Those switching from the TrueEarnings to either of the Amex SimplyCash will see their earning potential decrease, while those applying for the new Capital One option will receive the same rewards return as the TrueEarnings.  

Jaclyn Tersigni

Jaclyn Tersigni is a Toronto-based writer and editor. She's written on everything from tea sommeliers to motorcycle-riding granddads to regifting etiquette. With a journalism degree from Ryerson University, she got her start at ELLE Canada and The Globe and Mail. Her interests and hobbies include all things ocean-related (notably, the beach, oysters and surf culture), overbuying used books and clothing, riding her bike all over town and, most importantly, music old and new.

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