The Ultimate Guide to the New CIBC Costco Credit Card

Curious about the new CIBC Costco Mastercard? Whether you are currently a Capital One Costco credit card holder or are interested in opening up a new credit account with the bulk retailer, Costco’s new card is worth checking out. The credit card comes with significant rewards and can cut down your Costco bill, making it a great option for anyone who frequents the store.

Quick facts about the new Costco credit card

• Annual fee: $0
• Annual interest rate: 19.75% for purchases, 21.49% for cash advances
• Required annual income: $15,000

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Like its predecessor, the now-defunct Capital One Costco credit card, Costco’s new CIBC Mastercard is a no-fee cash back credit card. It offers an impressive 3% cash back at restaurants, making it ideal for anyone who loves to dine out. That being said, the CIBC Costco Mastercard’s biggest drawback is that the rebates are only provided via Costco store credit. If you prefer to shop elsewhere, the cash back, and the credit card itself, will probably not be worth it.

Cash back perks

The CIBC Costco Mastercard’s biggest benefit is its impressive cash back rewards. As a cardholder, you will earn 3% back on all restaurant-related purchases and any Costco gas bar bills. You will also earn 2% cash back when purchasing gas from other retailers and while shopping on costco.ca. Finally, you will get 1% cash back on all other purchases.

However, there is a big caveat to the benefit: you will only earn 2% cash back on the first $8,000 of Costco.ca purchases each year. Similarly, you will only earn 2% or 3% cash back on the first $5,000 spent on gas each year. After a category’s spending threshold is reached, the cash back rate will decrease to 1%. However, the limits will reset each year on January 1.

Shopping in-store at Costco will not count towards your $5,000 limit. However, since it will only net you a 1% cash back rate, we recommend shopping online whenever possible, though you may still find yourself stopping by your local Costco depot to visit the gas bar.

Unfortunately, while the new Costco credit card offers impressive cash back rewards for drivers and frequent restaurant-goers, redemption is a bit more difficult. Unlike many cash back cards, which simply apply your cash back balance directly to your statement, CIBC Costco Mastercard cardholders are mailed a Costco credit voucher once per year. Despite Costco’s remarkable selection, this system can be somewhat limiting. For instance, you may want to put the cash back value towards a specific TV model that Costco does not carry.

Great for big Costco purchases

Costco’s new card is either a blessing or a curse for anyone who feels like they spend too much at the bulk retailer. The CIBC Costco Mastercard allows you to use discounted CIBC Pace It installment plans for large Costco purchases. Essentially, this allows you to spread out large purchases over multiple payments.

On the one hand, this could make it easier to finance big necessities. On the other hand, if you have poor impulse control, it could be a recipe for disaster. It is also important to note that although the installment plans do not charge installment fees, they do come with interest rates. 

If you will be registering a Costco purchase for a 6-month installment plan, expect to pay 4.99% interest. Likewise, if you register for a 12-month installment plan, you will be met with a 5.99% interest rate; a 24-month installment plan will involve a 6.99% interest rate. Non-Costco purchases are still eligible for Pace It installment plans, but residents outside of Quebec generally have an interest rate that is 1% higher, along with a one-time 1.5% installment fee. When requesting Pace It installment plans for non-Costco purchases, Quebec residents are met with interest rates that are 3% higher but do not have to pay installment fees.

Additional perks

The CIBC Costco Mastercard also comes with significant credit card insurance benefits, much like its predecessor. If an eligible item is lost or stolen within 90 days of purchase, and was fully paid for via the CIBC Costco Mastercard, you are entitled to its value back, up to $2,500 per claim. Likewise, CIBC will double the manufacturer’s warranty for up to one year on most items purchased in full with your Costco Mastercard.

As if that were not enough protection, the CIBC Costco Mastercard also comes with impressive mobile device insurance. If you purchase a new phone through the card, whether in full upfront or in installments, you will be eligible for up to $1,000 in repairs or a replacement allowance within the first two years. This can cover just about any unexpected issue, including manufacturing defects, accidental damage, and theft. 

Drawbacks to the new Costco credit card

Despite the perks mentioned above, the new CIBC Costco Mastercard is not for everyone. If you do not already bank with CIBC, the card will require you to keep track of yet another set of login credentials. Plus, as we mentioned above, you can only use the cash back balance at Costco.

Read more about the best cash back credit cards in Canada.

If you are coming from a Capital One Costco credit card, there is another downside to this card. The Capital One card was known for its remarkable insurance coverage, like roughly two years of extended warranty for all eligible goods purchased through the card. However, its CIBC equivalent caps the warranty extension at one year. This figure is roughly on par with what other credit card companies offer, but it can be disappointing if you sign up for the CIBC card on the basis of its predecessor’s reputation as an impressive warranty extender.

Are you still unsure about how the CIBC Costco Mastercard works? Check out our list of frequently asked questions below for help: