Costco has treated credit cards differently from most retailers.
First, the chain only accepts one single credit card brand at any given time. For 16 years, that was American Express, but in 2016, a change was made.
“Costco Wholesale Corp. has started to issue new Visa cards to its customers, who after June 20 will no longer be able to use their former Costco cards from American Express,” MarketWatch reported.
That wasn’t just Costco moving its co-branded credit card from AmEx to Visa; it was the chain no longer taking any American Express and partnering with Citi to accept Visa and create a new signature card.
The Costco Anywhere card by Citi has been popular and recently improved its gas cash-back benefits.
Costco has increased its cash back on gas from its own gas stations from 4% to 5% for people who pay with the Costco Anywhere credit card from Citi. The warehouse chain’s gas stations only take credit and debit cards.
That’s part of a broad strategy to deliver value to members, but Costco has been less forthcoming about another change made to the Costco Anywhere card.
Costco made a major change
In September of 2024, Costco and Citibank filed an amendment to their agreement with the SEC.
The top-line change was an extension to the agreement.
“Costco hereby exercises its right pursuant to Section 12.01(a) to extend the Initial Term by three years. Therefore, the parties acknowledge that the Initial Term will continue through June 19, 2029,” the document reads.
But, there was also a second change made in the SEC filing, switching from a flat APR to tiered pricing.
“The single purchase APR listed in the Co-Branded Cardholder Account Terms will be replaced by the following four APRs based on the Bank’s FICO tiers (for both consumer and small business Co-Branded Card Accounts),” according to the SEC filing.
The SEC filing also shared the timing for the change:
- Bank and Costco anticipate that tiered pricing will become effective by October 31, 2024 for new Co-Branded Card Accounts.
- And, for eligible existing Co-Branded Cardholders, upon the effectiveness of a change in terms notice issued to such Co-Branded Cardholders (which notices will be issued starting in November 2024).
The change was communicated through a routine change-in-terms notice sent to cardholders.
Tiered pricing is also known as “risk-based pricing.”
“Risk-based pricing generally refers to the practice of setting or adjusting the price and other terms of credit offered or extended to a particular consumer to reflect the risk of nonpayment by that consumer,” according to the Consumer Financial Protection Bureau.
What is APR?
“An annual percentage rate (APR) is the yearly rate charged for a loan or earned by an investment. In other words, it is a measure of the cost of credit, expressed as a yearly rate,” according to a definition posted by Cornell Law School.
APR includes interest as well as other fees associated with the transaction.
“It is calculated by multiplying the interest rate per payment period by the number of such payment periods in a year,” Cornell Law added.
Costco and Citi’s change made their joint card more like most credit cards on the market.
“Most credit cards have a variable annual percentage rate (APR) that can change from one month to the next. Fixed-rate credit cards aren’t as common, but you might find some options from smaller financial institutions,” Experian reported.
More Costco:
- Costco reveals shift in shopper spending behavior
- Costco’s latest food court treat has fans divided
- Sam’s Club, BJs gain traction in area Costco dominates
LegalClarity backed that up and explained how rates are set.
“Nearly every credit card issued today carries a variable APR, meaning the rate adjusts automatically based on a benchmark index. The benchmark is almost always the U.S. Prime Rate, which tracks about three percentage points above the federal funds rate set by the Federal Reserve. As of early 2026, the federal funds rate target range is 3.50% to 3.75%, putting the Prime Rate at 6.75%,” the website shared.
Costco, it should be noted, always had a variable interest rate on its credit, but used a single rate, not a tiered system with multiple rates based on credit.
The Costco Anywhere card currently carries an APR of “18.74% to 26.74%, based on your creditworthiness,” according to Citi’s website. The rate climbs to 29.99% for cash advances.
Shutterstock
Costco has not commented on the change
An examination of Costco’s earnings calls during the period immediately before and after the change took effect found no mention of the company publicly addressing the switch.
Citi has also not commented on the APR change.
Costco CFO Gary Millerchip has commented on the gas benefit change to the Costco Anywhere card.
“We’re committed to continuing to improve the value of the membership,” Millerchip said. “We’ve made obviously some major changes recently with the extended opening hours and the Instacart benefits and 5% gas on the credit card, but we’ll continue to look for ways to add greater membership value.”
While it has not commented on the change from a single APR to a tiered pricing model, WalletHub did share an opinion on Costco’s credit card.
“The Citi Anywhere Visa does not offer much interest-rate appeal. Its regular APR is higher than the average for a card that requires excellent credit for approval. There aren’t any low introductory rates, either. So you’d better be ready to pay your bill in full every month if you’re thinking about applying,” the website shared.
Key Costco Anywhere credit-card perks
- 5% cash back on gas at Costco stations (up to $7K/year then 1%)
- 4% cash back on eligible gas & EV charging elsewhere (up to the same cap)
- 3% cash back on dining and eligible travel
- 2% cash back on Costco and Costco.com purchases
- 1% cash back on all other purchases
- No annual fee (requires paid Costco membership)
- No foreign transaction fees and other travel/purchase protections
Source: Citi
Related: Forget chicken fingers, Costco quietly adds new food court item
#Costco #quiet #credit #card #change #cost #members #money