For many Canadian families, a Costco membership is practically essential. I can still remember my parents making their semi-annual pilgrimage to the nearest Costco, some 500 kilometres from our home in northern British Columbia, returning with a minivan packed to the rafters with groceries.
Now I have a family and Costco membership of my own. Every so often I go through the checkout, I get pitched that I really should be using the CIBC Mastercard. But does the home of the best chocolate cake disguised as a muffin also have the best credit card offer? Or are there sweeter alternatives to be had?
Ratehub’s best credit cards for Costco
Costco credit card facts
Before we jump too far ahead, it’s important we first shed light on a few facts.
1. Costco only accepts Mastercard
If you’re looking for a credit card specifically to use for shopping at Costco, know your options are limited. Like many discount retailers with its size and power, Costco only accepts credit cards with the Mastercard badge. That immediately excludes some of the best credit cards in Canada that happen to be issued by American Express or Visa, like the American Express Cobalt or the TD CashBack Visa Infinite.
2. Costco isn’t considered a grocery store by credit cards
Costco isn’t classified as a grocery store according to Mastercard’s merchant code system. That means you won’t earn any additional points or cash back when using your card at Costco, even if your card has groceries as a bonus category. In short: if you carry a Mastercard that offers 2% cash back on groceries and 1% on everything else, you’d net just 1% at Costco.
3. Costco’s pitch: the CIBC Costco Mastercard
The credit card Costco would prefer you to use is the CIBC Costco Mastercard or previously the Capital One Costco Mastercard.
The card does have its benefits, including the fact it has no annual fee and doubles as your Costco membership card (which means you’ll have one less card to carry around in your wallet).
While there was a small improvement in the card's cash back value when transitioning from the Capital One Costco Mastercard to the CIBC Costco Mastercard, it still has one glaring drawback: it offers less than stellar rewards on most everyday purchases, including on your spending at Costco warehouses (just 1% cash back in purchases).
In sharp contrast to most store credit cards (think PC Financial or Walmart Mastercard) the CIBC Costco Mastercard doesn’t offer bonus rewards from its affiliated retailer – so you’ll get no more than 1% cash back on your in store Costco purchases. That's not that great considering other cash back credit cards can get you 2% back on your Costco purchases.
CIBC Costco Mastercard
- Annual Fee: $0
- Earn Rate: 3% cash back at restaurants and Costco gas, 2% at other gas stations and at costco.ca, 1% cash back on all other purchases including at Costco
- Interest rates: purchase 19.75%, cash back 21.49%
- Annual income requirements: $15,000 personal income
- The CIBC Costco Mastercard doubles as your Costco membership card (though you’ll still need to pay the membership fee)
- No annual fee and low annual income requirements
- You’ll earn no more than 1% cash back for in store Costco purchases, which means it’s not the best card to use at the warehouse retailer
- On most of your everyday purchases – other than gas – you’ll earn 1% cashback
- You’ll have to wait for the start of the calendar year for your cash back rewards since it’s sent via mail every January. Plus, it comes in the form of a cash coupon that can only be redeemed at Costco
- You must be a Costco member in order to receive the card
If you’re wondering whether you can do better than 1% cash back when shopping at Costco, your hunch is correct. Below are some of our favourite alternatives to consider for converting your bulk purchases into bulk rewards, many of which made our list of the best Mastercards in Canada.
Best Costco credit card alternatives in Canada
These are great alternative credit cards that will earn you more rewards than the Costco credit card.
Best for Everyday spending
based on spending $2,200/mo after $120 annual fee
- Earn rewards
1% – 10% earn rate
- Welcome offer: Get up to 10% cash back in your first 3 months and the $120 annual fee waived in the first year*
- Earn more cash back on the categories that mean the most:
– 5% on groceries*
– 4% on transit including ride sharing, taxis and public transportation*
– 3% on gas and electric vehicle charging*
– 2% on recurring bill payments like your monthly phone bill or favourite streaming service*
– 1% unlimited cashback on all other purchases*
- Get the highest cash back earn rate on groceries in Canada.*
- Get valuable benefits and offers for digital everyday services from a variety of on-demand apps and subscription services
- Extended Warranty Plus*
- Purchase ProtectionPlus*
- Complimentary membership in Mastercard Airport Experiences provided by LoungeKey*
- Access over 1 million Wi-Fi hotspots around the world – all at no added cost, and no added fees or roaming charges*
- Complimentary Roadside Assistance Program*
- BMO CashBack World Elite Travel and Medical Protection*
- BMO Concierge Service*
- Unlock Mastercard Travel Rewards cashback offers when you travel and shop outside of Canada
- BMO is not responsible for maintaining the content on this site. Please click on the Apply now link for the most up to date information
- Cash Advance Interest 23.99% (21.99% for Quebec residents)
- The offer may vary in Quebec
Best for Flexible spending
based on spending $2,200/mo after $0 annual fee
- Earn rewards
2% – 10% earn rate
- Welcome bonus
- Ratehub.ca’s 2023 Award Winner – Best No Fee Cash Back Credit Card
- Life’s back in session. Enjoy it with an extra 10% back.*
- Apply for a Tangerine Money-Back Credit Card by April 30, 2024 and earn an extra 10% back (up to $100) when you spend up to $1,000 in everyday purchases within your first 2 months.*
- Earn 2% Money-Back Rewards on purchases in two 2% Money-Back Categories of your choice, and 0.50% Money-Back Rewards on all other purchases.
- Earn extra rewards – have your Money-Back Rewards deposited into a Tangerine Savings Account, and get a 3rd 2% Money-Back Category.
- No limit on the amount of Money-Back Rewards you can earn.
- Change your 2% Money-Back Categories to suit your spending.
While the fact that the Tangerine Money-Back Credit Card is a no annual fee card, what really sets this card apart is the customizability. With this card, you can choose your own bonus categories (which will earn you a strong cash back rate of 2% per dollar spent). This is rare in the credit card market and means you can avoid being locked into a bonus category that you can’t take full advantage of or that doesn’t align with your spending habits.
- Customizable bonus categories: Flexibility to pick up to three bonus categories to earn 2% cash back on (out of a total of 10 options), which is in sharp contrast to most other cards where you have fixed bonus categories that you have no control over. Users are also given the freedom to change the bonus categories at any time (changes will take up to 90 days to come into effect)
- High cash back earning rate: 2% cash back per dollar on bonus categories is one of the richest earn rates for a no-fee card
- Wide acceptance: Widely accepted almost everywhere including No Frills and Costco
- Additional cards at no cost: Free supplementary cards for authorized users
- Frequent cash back reimbursement: Cash back is refunded on a monthly basis, instead of the standard annual reimbursement
- Limited cash back for non-bonus categories: For all purchases that aren’t categorized under one of your chosen bonus categories, you’ll earn just 0.5% cash back
- Limited travel insurance and perks: No travel medical insurance or any substantial side perks
Best for Everyday spending
based on spending $2,200/mo after $120 annual fee
- Earn rewards
1pt – 5pts / dollar earn rate
- This offer is not available for residents of Quebec.
- 20,000 bonus points†† (approximately $165 in cash back value) after you make $2,000 or more in eligible purchases within the first 90 days of your account opening.
- 10,000 bonus points††(approximately $80 in cash back value) once enrolled for paperless e-statements within the first 90 days of account opening
- Earn 5 points‡ for every $1 spent on eligible restaurant, grocery, digital media, membership, and household utility purchases until $50,000 is spent annually in the applicable category. 1 point‡ for every $1 on all other eligible purchases
- Each year, you will receive Birthday Bonus Points‡ equal to 10% of the total number of Points the Account earned in the 12 months before the month of your birthday, to a maximum Birthday Bonus each year of 15,000 Points.
- Redeem points‡ for cash back, brand-name merchandise, gift cards from participating retailers, charitable donations, and travel.
- Standard Annual Interest Rates of 19.99% on purchases, 22.99% on balance transfers✪, and 24.99% on cash advances
- Mobile Device Insurance***
- With Mobile Device Insurance, you’ve got up to $1,000 in coverage for eligible mobile devices in the event of loss, theft, accidental damage or mechanical breakdown
- $120 annual fee. $50 Additional Card Annual Fee for one authorized user (if you have one).
- To qualify, your personal annual income must be greater than $80,000, or your household annual income must be $150,000 or greater††††
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Stock up on groceries – and credit card rewards
The crux of the problem with the CIBC Mastercard is this: why would you sign up for a credit card that primarily rewards restaurant purchases if you’re shopping at Costco, presumably to stock up on merchandise and food for consuming at home? If you’re a casual Costco shopper who goes to a lot of restaurants, it could be an option worth considering. But if you want more rewards for your cart-filling grocery shopping trips, choose one of the Costco credit card alternatives above, and watch your rewards (or savings) pile up.
What will happen to my Capital One Costco Mastercard card?
Does Costco take Visa?
Unfortunately no. Canadians can pay for their Costco purchases using any Mastercard.
Previously, the store had one branded credit card - the Capital One Costco Mastercard - but as of March 2022, that partnership ended and CIBC acquired the existing Canadian Capital One Costco Mastercard portfolio. The store now has the CIBC Costco Mastercard as its branded card.