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
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.
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:
If you already have a Capital One Costco credit card, you should have automatically been sent a CIBC Costco Mastercard in the mail. However, if you are not currently a Costco credit card holder, you will need to put in an application.
You can either apply for a CIBC Costco Mastercard in a Costco store or online. Either way, you will need to meet the card’s $15,000 minimum annual income requirement. Though the credit card does not have an application fee, you must have a valid Costco membership, which costs either $60 per year or $120 per year depending on your membership tier.
Yes, you can apply for a CIBC Costco Mastercard inside a Costco warehouse. However, as with the online application, you will need to show that you already have a valid Costco membership. Similarly, you will want to bring photo ID or other documentation that proves your identity.
No, a CIBC Costco Mastercard does not include membership to Costco’s retail locations. Also, you must have a Costco membership in order to apply for the card. As such, the CIBC Costco Mastercard has been created with the intention that all cardholders are Costco members, with the cash back voucher being awarded as Costco store credit and the credit card itself providing extra rewards for purchases made at Costco’s gas bar or on the retailer’s website.
Since Costco membership costs at least $60 each year, the CIBC Costco Mastercard may not actually be a no-fee card for individuals who are not currently members. If you are in such a situation, we recommend looking at different credit cards before applying to Costco’s CIBC Mastercard. Chances are that you can find something cheaper that will be a better fit. However, if you are already a Costco member, the new CIBC Mastercard is worth checking out.
Much like any other credit card, it is easy to pay off a CIBC Costco Mastercard.
First, you need to know what your balance is. You can receive paperless e-statements online or request to be sent paper statements each month. E-statements can be accessed via CIBC’s online banking portal.
If you would prefer to pay online, you can add your CIBC account information to your main bank account as a digital payee. This will make it easy to send money directly from your chequing account. You can also pay your credit card by visiting a CIBC bank branch or via telephone banking.
If you do not want to worry about paying off your credit card bill each month, you can set up recurring bill payments via the CIBC app or mobile banking website. However, you should make sure that you never spend too much money, as recurring payments can make it easy to accidentally spend more than you currently have in your bank account. Also, we caution against setting up recurring bill payments if you are hoping to take a hands-off approach to monitoring your finances. Sure, the convenience can be helpful, but it also makes it easier to miss fraudulent payments, potentially costing you hundreds or thousands of dollars.
The CIBC Costco Mastercard is a solid pick. However, whether it is worth applying for or not really depends on your current Costco status, along with your overall financial habits. If you are already a member, chances are that the card is worthwhile. Considering the fact that Costco’s latest credit card does not have a fee, it is impressive that it offers 2% cash back on Costco.ca purchases. These include expensive electronics, household essentials, and more. Plus, it can be helpful to finance big Costco purchases, especially if you will be moving soon or are otherwise in need of furniture and household items. It is unlikely that you will hit the $5,000 cap on gasoline purchases, which would bump gas-related cash back rates down to 1%, especially since the average car uses approximately $2,000 in gasoline each year.
That being said, depending on your lifestyle, you may be able to find credit cards that offer more relevant perks. For example, it is not difficult to find credit cards that offer 3% cash back on all gas purchases, not just those from a Costco gas bar. Similarly, there are a myriad of competitive cash back credit cards that do not require you to redeem your rewards via store credit.
Finally, we would generally advise against opening up a CIBC Costco Mastercard if you do not already have a Costco membership. Sure, there is a chance that you love the retailer and would not mind spending $60 per year for membership. However, since there are so many impressive no- and low-fee credit card options, we would recommend checking out other options first. Perhaps visit the store with a friend who is a member before opening your own account.
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About The Author: Arthur Dubois
Passionate about personal finance and financial technology, Arthur Dubois is a writer and SEO specialist at Hardbacon. Since his arrival in Canada, he’s built his credit score from nothing.
Arthur invests in the stock market but doesn’t pay any fees because he uses National Bank Direct Brokerage online broker and Wealthsimple’s robo-advisor. He pays for his subscriptions online with his KOHO prepaid card, and uses his Tangerine credit card for most of his in-store purchases. When he buys bitcoins, it’s with the BitBuy online platform. Of course it goes without saying that he uses the Hardbacon app so that he can manage all of his finances from one convenient place.
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