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CIBC Costco Mastercard alternatives: The 4 best Costco credit cards in Canada

Jordan Lavin

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?

Let’s explore.

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 (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.

 

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

Pros:

  • 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

Cons

  • 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.

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Best credit cards for Costco shoppers

These are great alternative credit cards that will earn you more rewards than the Costco credit card.

BMO Cashback World Elite Mastercard

If you’re looking for the best cash back Mastercard on the market right now, you’d be hard-pressed to find a better deal than the BMO Cash Back World Elite

Offering a whopping 10% cash back across the board for the first three months (as well as a waived $120 annual fee for the first year), this card still provides better point value than most even after the promotional period ends. Cardholders will get an industry-leading 5% back on groceries, then 3% back on gas (including electric vehicle charging), 4% on transit and 2% on recurring bills. That’s a whole lot of value on one card. Plus, the annual fee of $120 is quite reasonable for a card with this much earning potential.

It’s also surprisingly flexible: there’s no limit to how much cash back you can earn, you’ll be able to redeem for as little as a dollar at a time, and you can spend your rewards on your statement, deposit it in a BMO bank account, or use it towards stock trading at BMO InvestorLine.

Tangerine Money-Back Credit Card

If you’re looking for a great all-around cash back card with no annual fee, the Tangerine Money-Back Mastercard might just be the perfect fit. With this card, you’ll earn an unlimited 2% cash back in two spending categories of your choice (there are a total of 10 categories to pick from, including everything from groceries, restaurants, gas, and more), and 0.5% on all other purchases. Plus, if you opt to have your cash back rewards deposited into a Tangerine Savings Account, you’ll get a third category earning 2% cash back (making opening a savings account with the online bank a no brainer). 

In sharp contrast to the Tangerine Money-Back Card, most other no fee rewards cards from Mastercard (or Visa) either offer only two bonus categories, earn up to a maximum 1%, or have rewards caps that can put a ceiling on how much cash back or points you can collect.

The flexibility to pick your own bonus categories - to match your particular spending habits - is a standout feature and isn’t offered by any other credit card in Canada. Better yet, Tangerine lets you change your chosen bonus categories at any time (though, it can take one statement period for the changes to come into effect).

Unlike most other cash back cards, which only let you redeem your cash back once every year, the Tangerine Money-Back Card will deposit your rewards every month. That means you can start taking advantage of your rewards that much sooner.

Plus, if you earn an income of at least $60,000 (or $100,000 as a household), you could be eligible for the higher-tier Tangerine World Mastercard, which comes with additional perks including rental car coverage and mobile device insurance.

Brim World Elite Mastercard

The Brim World Elite Mastercard offers a unique mix of perks that can fit with a variety of spending personalities.

The Brim World Elite Mastercard offers a base earn rate of 2% (up to $25,000 annually), making it a great option for the everyday shopper looking to earn the same straight-forward rewards on everything versus having to think about bonus categories or retail merchant codes. The kicker: you can collect bonus rewards when shopping from retailers directly partnered with BRIM. That includes up to 4% at Apple and Microsoft, 3% from Lufthansa and Emirates Airlines, and more from over 200 retailers. There’s also Brim's flexible rewards system, which lets you easily redeem its native Brim Rewards in increments of 100 points for $1 in statement credits (or 1% per point, effectively like a cash back card).

All of Brim’s cards waive their foreign transaction fees, meaning you won’t have to shell out an extra 2.5% whenever you make a purchase in a non-Canadian currency (whether you’re shopping online from a U.S. only e-commerce site or spending while abroad). The card’s insurance perks aren’t too shabby either, offering coverage for mobile devices, rental cars and up to $5 million in out-of-province medical emergencies coverage.

Find your perfect credit card in under 60 seconds - No SIN required

  1. Tell us a bit about yourself

    Answer some questions so we can personalize our recommendations - this won't impact your credit score

  2. Check your eligibility

    We confirm your eligibility with our partner, TransUnion. This will be a ‘soft credit check’ which you can see but lenders cannot

  3. Find your perfect matches

    We show you the cards you’re most likely to want and most likely to get

let's get started

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.

Also read:

Frequently Asked Questions

What will happen to my Capital One Costco Mastercard card?


Does Costco take Visa?


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