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

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 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

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.

Best Costco credit card alternatives in Canada 

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

featured

Best for Everyday spending

First year reward
$470/yr

based on spending $2,200/mo after $120 annual fee

Earn rewards

1% – 10% earn rate

featured

4.5 Ratehub rated

Best for Flexible spending

First year reward
$647/yr

based on spending $2,200/mo after $0 annual fee

Earn rewards

2% – 10% earn rate

Welcome bonus

$100

featured

Best for Everyday spending

First year reward
-$113/yr

based on spending $2,200/mo after $120 annual fee

Earn rewards

1pt – 5pts / dollar earn rate

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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.

Also read:

Frequently Asked Questions

What will happen to my Capital One Costco Mastercard card?


Does Costco take Visa?