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TrueEarnings® Card from Costco and American Express – Review

By Christina Majaski

Reviewed by:
Rating:
4
On March 11, 2014
Last modified:September 17, 2014

american express trueearnings cardMany credit cards provide rewards for purchases made at supermarkets, but specifically exclude those made at shopping warehouses and superstores.

The TrueEarnings® Card from Costco and American Express (a Money Crashers partner) is an exception. It provides minimal rewards for such purchases, and if you shop frequently at Costco or want to earn cash back on gasoline purchases, you may want to give it serious consideration.

Key Features

  • Fees. There is no annual fee for this card, but you do have to pay for your annual Costco membership. There is a foreign transaction fee of 2.7% and a balance transfer fee of $5 or 4%, whichever is greater. There are three types of Costco memberships: Business, Gold Star for individuals, and Executive. The membership fees are $55 per year for individuals and Business-level members, and these include a household card. Business members may also purchase up to six additional cards at $55 each for partners or associates. Executive memberships are $110 per year and also include a household card.
  • APR. There is an introductory APR of 0% for the first 6 months on purchases. The APR for balance transfers and purchases after the introductory offer is 15.24% and varies with changes in the prime rate.
  • TrueEarnings Rewards. Your annual reward is based on 12 billing periods beginning in February. You earn 3% on your first $4,000 spent on gasoline at Costco and American gas stations (excluding gas purchases at superstores, supermarkets, convenience stores, or warehouse clubs other than Costco). You also earn 2% at restaurants located in the U.S.; 2% for travel purchases such as airfare, hotel stays, car rentals, Costco Travel purchases, and cruises; and 1% on all other purchases. You receive your cash back annually in the form of a coupon that can be redeemed at any U.S.-based Costco (including Puerto Rico) for either cash or merchandise by August 31st of the year in which the coupon is issued.
  • Additional Cardholders. You can add cardholders to your account to earn more rewards. However, each person must have a Costco membership in his or her own name.

american express trueearnings costco card

Advantages

  1. No Annual Fee. Although you do have to pay for your Costco membership, there is no annual fee for the card. Even if you consider the Costco membership fee of $55 essentially an annual fee for the credit card, it would still be lower than many other rewards credit cards currently available. In addition, if you use your card for all gasoline purchases up to $4,000, you receive 3% cash back, or $120, which would pay for the Costco membership for a couple of years.
  2. 3% Cash Back on Gasoline. The opportunity to earn 3% cash back on gasoline purchases all year long is one of the best reward rates available. Keep in mind that this applies to other gas stations and not just Costco gasoline, so even if you don’t frequent Costco gas stations or live near one, you can earn bonus cash back at fuel stations that may be more conveniently located.
  3. Not Limited to Shopping at Costco. Although only 1%, the American Express Costco card is one of the only cards with which you can earn rewards from Costco purchases. With other cards, these purchases would likely fall into the “other” category because of the warehouse and superstore clause. However, you are not limited to earning rewards at Costco. You can earn cash back from other retailers in categories such as gas, restaurant, and travel purchases.
  4. High Rewards on Restaurants. There are very few credit cards that reward restaurant purchases year-round without any limits. The American Express Costco TrueEarnings card offers unlimited 2% cash back rewards on restaurant purchases throughout the year. This includes fast food as well as any establishment considered a “restaurant,” or coded as such by the retailer. Merchants not eligible include nightclubs, convenience stores, grocery stores, supermarkets, or restaurants outside of the U.S. that are owned by a U.S. company (for example, Hard Rock Cafe in Paris). Restaurants located inside other establishments such as hotels and casinos also may not be recognized as restaurants.
  5. American Express Benefits. Although the Costco card could be considered a store card or even a grocery card, you are able to receive the travel benefits and insurance available on other generalized credit cards. This is handy when traveling and making large purchases that require extra protection.

Disadvantages

  1. $4,000 Cap on Gas. While you do earn 3% on gasoline purchases at Costco gas stations, there is a cap of $4,000 on purchases that are eligible to earn 3%. After that cap is reached, rewards are cut back to 1% on gasoline purchases. If you have a bigger vehicle or multiple vehicles, it isn’t going to take long to reach the $4,000 limit on gas.
  2. No Special Sign-up Bonus. Many cash-back cards offer extra bonuses, points, or cash back in the first 3 months when you reach a certain dollar amount in purchases. Although this card provides an introductory APR of 0% for the first 6 months, it is not a bonus cash back reward. Additionally, cards such as Chase Freedom offer an introductory rate of 0% on purchases and balance transfers for 15 months, making the Costco card’s introductory offer of 0% for 6 months less attractive.
  3. Actual Groceries Only Earn 1%. The 3% cash-back rate only applies to gasoline purchases at Costco, and 2% applies to restaurants and travel. If you planned on using the card to rack up cash back from your regular grocery purchases, you’re only going to earn 1% with the American Express Costco card. Most cash back cards that reward grocery purchases specifically exclude discount stores and wholesale stores such as Costco anyway, but if you want to earn cash back on groceries at regular stores, you may earn more on your purchases with a different card. For example, the BankAmericard Privileges With Cash Rewards card awards 2% cash back at grocery merchants and 3% on gasoline purchases with a cap of $1,500 per quarter in each category.
  4. Cash Back Is Paid Annually. Instead of allowing the opportunity for a statement credit or the purchase of gift cards or merchandise, cash back is paid annually in the form of a coupon. Your card account must be in good standing in order to get your coupon, which you then take to the store to redeem before August 31st of the year it was issued. This can be a hindrance if you are unable to get to the store in time to redeem the coupon.
  5. You Need a Costco Membership. In order to keep the American Express Costco card, you have to maintain a Costco membership. This is only a problem if you decide at some point you no longer want one, however. There is no option to keep the credit card without a membership, which means you would be forced to keep paying membership dues for a store you don’t want to be a member of. If you cancel your Costco membership, your credit card is canceled and you lose any cash back that had accrued.
  6. Foreign Transaction Fee. 2.7% can be a significant fee if you travel frequently outside of the United States and plan to use your card for purchases.

Final Word

If you already happen to be a Costco member, the American Express Costco TrueEarnings card allows you to earn bonus cash back on restaurants and travel purchases without paying an annual fee, except for the Costco membership fee. You also have the benefit of earning 3% on your gasoline purchases. However, if you travel outside of the United States frequently, you’re going to want a card that charges no foreign transaction fees. This is also not a great card if you are specifically looking for cash back rewards on actual grocery store purchases, or would like to redeem rewards in some way other than taking a coupon to a Costco store.

Verdict

The TrueEarnings® Card from Costco and American Express is great if you’re a Costco shopper and also want to earn cash back on your gasoline purchases. However, other credit cards, such as the American Express Blue Cash Everyday Card, offer bigger bonus opportunities on generalized purchases and groceries, as well as better introductory offers and easier methods of redeeming rewards.

Score

4.0 out of 5 stars: Great opportunities for earning cash back on gasoline and restaurants that may be considered everyday purchases, but not great if you don’t shop at Costco, or if you want to earn rewards on grocery purchases.

Editorial Note: The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author's alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Christina Majaski
Christina Majaski has written for online and print publications since 2003 on topics related to personal finance, legal matters, parenting, and careers. She lives in the Minnesota tundra, where in her free time she enjoys reading, writing, interacting via social media, and hanging out with her daughter.

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  • Joethrifty

    Keep in mind that if you are a costco executive member you get 2% back from costco and 1% from amex for a total of 3%

  • Lorilu

    When you receive your cash back from American Express, you can exchange it for cash at your local Costco. Just sign it and give it to a cashier.

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