The CIBC Costco Credit Card: Benefits and Alternatives

The CIBC Costco credit card comes with great rewards and can reduce your bill if you shop at Costco often. But if you shop at several different locations, take the time to compare it to other store credit cards.

Quick facts about the Costco credit card

• Annual fee: $0
• Annual interest rate: 20.75% for purchases, 22.99% for cash advances

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To get this credit card, you have to be a Costco member, so even though it is free, your membership isn’t, which is something to keep in mind. It offers an impressive 3% cash back in restaurants and on Costco gas. That said, the biggest drawback of the CIBC Costco Mastercard is that the cash back is only provided in the form of a Costco store credit. If you’d rather spend your rewards elsewhere, you’re better off choosing another card.

Cash back perks

In addition to 3% cash back on all purchases at restaurants and Costco gas stations, you’ll also receive 2% cash back at other gas stations and on Costco.ca. Finally, you’ll get 1% cash back on all other purchases, including those made in person at Costco stores.

However, there’s a catch: the 2% cash back only applies to the first $8,000 in Costco.ca purchases each year. Similarly, the limit for gasoline is the first $5,000 spent. Once a category’s spending threshold is reached, the cash-back rate will drop to 1%.

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 6.99% interest. Likewise, if you register for a 12-month installment plan, you will be met with a 7.99% interest rate; a 24-month installment plan will involve a 8.99% 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. 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

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.

Alternatives to the Costco credit card

Several major chains offer their own credit cards. While few of them offer higher cash back than Costco’s, they sometimes offer other benefits.

Walmart Rewards Mastercard

With no annual fee, the Walmart Rewards credit card earns cash back every time you use the card at Walmart or any other store. Walmart offers a very simple way to redeem your rewards: directly on the payment terminal in its stores or online. Just click a button and you’re done!

Purchases made online at walmart.ca or in a Walmart store in Canada earn 1.25% cash back in Walmart Reward Dollars. This rate is reduced to 1% for all other stores. On certain brands sold at Walmart, you earn 5% cash back. In addition, for gasoline and transportation, the rate is 2%.

Neo Credit

Neo offers a range of credit products, including the Neo Credit card. Your first purchase at a partner store could earn you 15% cash back. On average, you’ll earn 5% cash back at many partner stores across the country and online, including AVIS, LCBO, Netflix and Clearly. More specifically, the free package offers 1% cash back on gas and groceries, an average of 5% cash back at restaurants, bars and cafés, 3% on streaming, carpooling and delivery, and a lot more benefits.