There are plenty of business credit cards out there that reward office supply purchases and business-related purchases, but those that reward grocery store purchases are rare – and they usually exclude superstores and warehouse clubs, such as Costco and Sam’s Club. The TrueEarnings® Business Card from Costco and American Express (a Money Crashers partner) attempts to fill that gap and provide small business owners with an opportunity to earn rewards on both gas purchases and purchases made from Costco.
- Fees. There is no annual fee, but you do need a Costco membership. This starts at $55 per year for a business membership, which also includes household membership. Executive membership includes household membership as well – costing $110 per year – but it features the opportunity to earn 2% cash back on Costco purchases (up to $750 per year in rewards) in addition to the rewards earned with the credit card. There is no option to transfer balances with this card, and the foreign transaction fee is 2.7%.
- APR. There is an introductory APR of 0% on purchases for the first 6 months.
- Rewards Program. You earn 4% cash back on the first $7,000 spent each year on gasoline at Costco and U.S. gas stations – excluding other superstores and warehouse clubs – and 1% on those purchases after you reach the annual cap. You are also awarded unlimited 2% cash back at U.S. restaurants and on travel purchases such as airfare, hotel stays, car rentals from major companies, cruises, and purchases made from travel agencies and Costco Travel. You earn an unlimited 1% cash back on all other purchases, including non-gas Costco purchases.
- Redeeming Cash Back. You receive a reward coupon on the last page of your February billing statement, which you can redeem at any U.S. Costco warehouse, including in Puerto Rico, for either merchandise or cash. This coupon expires August 31st in the year it is issued and must be redeemed in person.
- OPEN Benefits. American Express offers benefits such as the OPEN Savings Network where you can receive a discount of up to 10% on purchases made from business-related retailers such as Hertz, FedEx, and Hyatt. You also receive access to the OPEN Forum where you can ask questions and share tips and advice with other small business owners. ReceiptMatch, another feature, is an app that allows you to take photos of your receipts with a smartphone, label them, and match them to expenses on your credit card statement.
- Low Membership Fee. If you select the standard business membership, the annual fee is $55 per year. You can earn that much back in rewards by spending approximately $1,375 on gasoline per year, or $2,750 on restaurants or travel.
- Earn Rewards on Warehouse Club Purchases. Rewards cards almost always exclude superstores and warehouse clubs from their programs. If you are a Costco shopper, the TrueEarnings Business card offers one of the only opportunities to earn rewards on such purchases.
- Additional Cash Back on Executive Membership. The TrueEarnings Business card only awards 1% cash back on purchases made at Costco (except for gasoline), but if you have an Executive Membership, you earn an additional 2% on those purchases up to a total annual award of $750. The downside is that the cash back earned from the Executive Membership can only be redeemed for Costco purchases, while the credit card cash back can be redeemed for both. If you spend approximately $37,000 per year at Costco, you could earn almost $750 from the Costco membership, plus $370 from the 1% awarded by the card.
- No Sign-up Bonus. Often, rewards cards offer sign-up bonuses to attract new cardholders. The TrueEarnings Business card does not. Various travel rewards cards for business owners offer points or miles that can be redeemed for award flights or hotel stays – the Chase Ink Cash, for example, offers a bonus worth $200, and charges no annual fee. If you’re planning on making $3,000 worth of purchases within your first three months, you could earn more with a card that provides a sign-up bonus for those purchases.
- Short Introductory APR. The TrueEarnings for Business card offers an introductory APR on purchases for the first 6 months, but that is the shortest period among cards that do. For example, the Chase Ink Cash credit card offers 0% for 12 months.
- Costco Membership Requirement. Tying the card into a Costco membership is convenient, especially if you’re a regular Costco shopper. However, if you decide you don’t want to shop at Costco anymore, you cannot cancel your membership and continue using this credit card. In order to keep the TrueEarnings Business card, you must remain a member and pay the annual Costco membership fee.
- Low Cap on Gasoline Purchases. You earn the most cash back on gasoline purchases: 4% up to $7,000 in purchases per year. In comparison, the Chase Ink Cash card awards 2% on gasoline purchases with a cap of $25,000 per year, a much higher overall earnings potential.
- Coupon Expiration. If you don’t spend your Costco rewards coupon by August of the year you receive it – it expires. This is a disadvantage especially if you purchase frequently online but don’t actually live near a Costco. A business card such as the Chase Ink Cash awards 5% on office supplies and 2% on gasoline and restaurant purchases, and allows you to redeem for a check, statement credit, direct deposit, gift cards, or travel through Ultimate Rewards with no expiration. It also has no annual fee.
- Foreign Transaction Fee. The foreign transaction fee of 2.7% is among the highest charged by credit cards. If you travel frequently outside the U.S., this fee seriously minimizes any rewards you earn on purchases. Other business rewards cards, such as the Capital One Spark Cash for Business, which has an annual fee of $59, and the Chase Ink Plus for Business, which has an annual fee of $95 – but no foreign transaction fee – are better options.
- Not for Purchases Made Outside of the U.S. In addition to the foreign transaction fee, the TrueEarnings for Business card is not ideal for use outside of the United States – the bonus rewards are only applicable to purchases made with U.S. merchants. Foreign purchases only earn 1% per dollar spent. The American Express brand is also not as widely accepted as Visa or MasterCard, which could pose problems when abroad.
If you shop frequently at Costco, the TrueEarnings Business card provides an opportunity to earn extra cash back on those purchases – plus others. However, the ability to shop and redeem rewards at Costco stores before they expire is an important factor in determining if the card is a worthwhile choice. Other business cards may not reward Costco or superstore purchases, but they offer a sign-up bonus, a longer introductory APR, and better earning and redeeming options, especially if you travel outside of the U.S. frequently.
If you live near and shop frequently at Costco stores, spend less than $7,000 per year on gasoline, and use your card primarily within the United States, you can earn valuable rewards for a low annual fee with the TrueEarnings® Business Card from Costco and American Express – rewards you can’t earn with other cards because of the superstore exclusion.
3.5 out of 5 stars: Unless you shop almost exclusively at Costco, other business cards reward similar purchases – like gasoline, restaurants, and travel (but not Costco purchases) – and provide better rewards opportunities and features for small business owners.