Capital One Costco Mastercard Alternatives: The 7 best Costco credit cards in Canada

by Jordan Lavin October 2, 2019 / No Comments

Click to view a summary of the best Costco Cards (+)

The best Costco credit cards in Canada

Credit Card Annual Fee Rewards at Costco
MBNA Rewards World Elite (VIEW DETAILS) $120 2% in travel rewards
Rogers World Elite (VIEW DETAILS) $0 1.75% cash back
BMO World Elite (VIEW DETAILS) $150 (waived 1st year) 1.4% in travel rewards
BMO CashBack World Elite (VIEW DETAILS) $120 (waived 1st year) 1.5% cash back
Shell CashBack Elite Mastercard (VIEW DETAILS) $79 1.25% cash back
Rogers Platinum Mastercard (VIEW DETAILS) $0 1.25% cash back
MBNA Rewards Platinum Plus (VIEW DETAILS) $0 1% in travel rewards

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 Capital One Costco 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.

Credit cards at Costco: Mastercard only

Before we jump ahead into our top Costco credit card recommendations, it’s important we first shed light on a few facts.

First, 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 Scotiabank Gold American Express or the TD First Class Travel Visa Infinite.

Second, 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. Simply put: if you carry a Mastercard that offers 2% cash back on groceries and 1% on everything else, you’d net just 1% at Costco.

Costco’s pitch: the Capital One Costco Mastercard

The credit card Costco would prefer you to use is 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).

However, the Capital One Costco Mastercard has one glaring drawback: it offers less than stellar rewards on most everyday purchases, including on your spending at Costco (just 0.5% cash back on your first $3,000 in purchases and 1% after that).

In sharp contrast to most store credit cards (think PC Financial or Canadian Tire’s Mastercards) the Capital One Costco Mastercard doesn’t offer bonus rewards from its affiliated retailer – so you’ll get no more than 1% cash back on your Costco purchases.

Capital One Costco Mastercard

The Pros

  • You’ll earn 3% on dining and 2% on gas.
  • The Capital One Costco Mastercard doubles as your Costco membership card.
  • While many of its insurance benefits are pretty standard for a credit card (i.e. purchase protection) it does feature some nice to haves for a no fee card like rental car coverage and baggage delay insurance.

The Cons

  • You’ll earn no more than 1% cash back at Costco, which means it’s not the best card to use at the warehouse retailer.
  • On most of your everyday purchases – other than gas and dining – you’ll earn just 0.5% cash back on your initial $3,000 in annual purchases and 1% thereafter.
  • 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 credit cards for Costco shoppers

MBNA Rewards World Elite

  • $120 annual fee
  • Earn 2 MBNA points (2% in travel points) on all purchases
  • Receive 20,000 bonus points†† after you make at least $2,000 in eligible purchases within the first 90 days of your account opening
  • Receive 10,000 bonus points†† once enrolled for e-statements within the first 90 days of account opening
  • Income requirement: $80,000

The MBNA Rewards World Elite Mastercard is a great option for Costco shoppers.

It rewards you with 2 points per dollar across all categories, including on purchases at Costco. 2 MBNA points equal to $0.02 when redeemed for travel, so you’ll essentially pocket 2% at Costco – which is double the earn rate of the Capital One Costco Mastercard.

The MBNA Rewards World Elite also comes with an impressive welcome offer of 30,000 points ($300 value) that you’ll get for enrolling for e-statements and making $2,000 in purchase on the card within the first 90 days. While the card does have a $120 annual fee, it doesn’t cost anything to add authorized users, so you and your partner or a fellow family member can both rack up points with this card together at no extra cost.

Rogers World Elite / Rogers Platinum Mastercard

With no annual fee and 1.75% cash back on domestic purchases, the Rogers World Elite Mastercard will earn you far more cash back than the Capital One Costco Card.

If you don’t earn the minimum $80,000 to qualify for the World Elite version, Rogers also offers the Rogers Platinum Mastercard, which pays 1.25% cash back on domestic purchases and has no minimum income requirement.

BMO World Elite Mastercard

  • $150 annual fee (waived for the first year)
  • Earn 3 BMO Rewards points per dollar on travel, dining and entertainment purchases; 2 points per dollar on everything else
  • Earn 35,000 bonus points (value: $250) when you spend $3,000 in the first 3 months
  • VIP lounge access with the included Mastercard Airport Experiences membership, plus 4 complimentary passes per year
  • Income requirment: $80,000

One of the best travel credit cards in Canada, the BMO World Elite Mastercard rewards you with 3 points per dollar spent on travel, restaurants, and entertainment, while paying 2 points per dollar on other categories.

Since 1 BMO point equals to 0.7% when redeemed for travel, that works out to a return of 1.4% on Costco purchases – which comes out well ahead of the Capital One Costco Mastercard.

This card also has some of the best perks available including top-notch travel insurance benefits, complimentary access to airport lounges, and a welcome bonus valued at up to $240. The card’s $150 annual fee is also waived for the first year.

BMO CashBack World Elite Mastercard

  • $120 annual fee (waived for 1st year)
  • Welcome Offer: 5% cash back on all purchases (up to $200) for first 3 months
  • 1.5% cash back thereafter
  • Free access to Roadside Assistance program
  • Lounge access with the included Mastercard Airport Experiences membership
  • Income requirement: $80,000

If you’re not much of a traveller, consider the BMO CashBack World Elite Mastercard. This card offers 1.5% cash back on all spending categories – including at Costco. It also comes with a free roadside assistance membership that’ll cover your vehicle for everything from emergency towing to flat tire replacements.

Plus, when you sign up as a new cardholder, you’ll earn 5% cash back on all purchases (including at Costco) for the first three months. The card’s redemption process is also super flexible, as you can redeem your cash back as a statement credit as soon as you’ve racked up $50 in rewards. This card has an annual fee of $120 but it’s waived in the first year.

Shell CashBack World Mastercard

  • $79 annual fee
  • 3% cash back at Shell gas stations
  • 1.25% cash back everywhere else
  • Free roadside assistance membership ($69 value)
  • Income requirement: $60,000

The Shell CashBack World Mastercard from BMO offers a lucrative rewards structure for anyone who spends big on gas and at Costco.

First and foremost, the card offers 1.25% cash back per dollar spent everywhere including at Costco, which is well above the standard 1% earn rate. Second, it lets you earn up to 3% when you refill your car’s gas tank at any of the over 1,300 Shell gas stations located across Canada. Last but not least, the card comes with a complimentary roadside assistance membership that on its own carries a $69 value. All that is packaged into a card that comes with a reasonable $79 annual fee.

MBNA Rewards Platinum Plus Mastercard

  • No annual fee
  • Earn 4 points per $1 spent on eligible gas, groceries and restaurant purchases during the first 90 days
  • After 90 days, get 2 points‡ per $1 on eligible gas, groceries and restaurant purchases ($5,000 annual cap on each category).
  • 1 point‡ for every $1 spent on all other eligible purchases
  • Receive 5,000 bonus points after making $500 in eligible purchase within the first 90 days of account opening
  • Receive 5,000 bonus points once enrolled for e-statements within the first 90 days of account opening
  • Income requirement: None

The MBNA Rewards Platinum Plus has no annual fee and no minimum income requirement, immediately making it one of the most accessible options on this list. Cardholders earn 2 points per dollar spent on gas, groceries, and restaurants, and 1 point per dollar on all other purchases (including at Costco). For context: 1 MBNA point = 1% when redeemed for travel.

Yes, the card’s rewards scheme offers a standard 1% at Costco, but unlike the Capital One Costco Mastercard, it also has groceries as a bonus category. That means it’s also a good option to use for shopping runs at full-fledged grocery stores like No Frills or Loblaws, and overall, a great all-around alternative to the Capital One Costco Mastercard.

Honourable mentions

Triangle World Elite

  • No annual fee
  • Get 4% in Canadian Tire Money at Canadian Tire, Sport Chek, and participating Mark®/L’Équipeur and Atmosphere locations
  • Get 3% in Canadian Tire Money on groceries (on the first $12,000 per year; excludes Costco and Walmart)
  • Get 1% everywhere else
  • Earn 5¢ to 7 ¢per litre back in Canadian Tire Money at Gas+ and participating Husky locations
  • Free roadside assistance membership
  • Income requirment: $80,000

If you love shopping at Canadian Tire as much as you do Costco, you’ll want to consider picking up the Triangle World Elite Mastercard.

While you’ll earn a standard 1% (in Canadian Tire Money) at Costco, you’ll get 3% at almost every grocery chain in Canada as well as 4% whenever you shop from Canadian Tire. The card also comes with a free Gold Membership to Canadian Tire’s roadside assistance service – all for no annual fee. It’s all those perks combined that landed this card a place on this list, despite its normal earn rate at Costco.

MBNA True Line® Mastercard®

  • No annual fee
  • Standard annual interest rates of 12.99% on purchases and balance transfers
  • You could get a 0% promotional annual interest rate for 12 months on balance transfers (plus a 3% fee or a minimum of $7.50). Offer expires February 29, 2020
  • Around the clock protection against fraudulent charges
  • Note: Balance transfer offer and fixed interest rate varies for residents of Quebec

Compared to the other cards on this list, the MBNA True Line is what you’d consider a black sheep since it’s a low interest credit card and doesn’t offer any rewards. Nonetheless, it holds a spot on our list for one simple reason: if you regularly carry a balance on your credit card from one month to the next, this card will help you save more than a rewards card.

That’s because it’s got an annual interest rate of just 12.99% – which is considerably lower than the standard of 19% found on most cards, including the Capital One Costco Mastercard.

Simply put, if you don’t quite manage to pay off your credit card statement in full every month but rely on credit when shopping at Costco, the MBNA True Line will help you come out ahead (even without the benefit of earning rewards) since you’ll owe so much less in interest. The fact it’s got no annual fee and has no specific income requirements means it’s also quite accessible too.

Stock up on groceries – and credit card rewards

The crux of the problem with the Capital One Costco 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:

categories: Credit Cards