CIBC Costco Mastercard review: Is it the best credit card for Costco in Canada? - MoneySense (2024)

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Costco is a popular shopping destination for Canadians who want deep discounts on bulk buys. The catch? Costco requires you to have a membership to shop there, and that costs either $60 per year (for a Gold Membership) or $120 per year (for an Executive Membership). Costco’s also pickier than most retailers when it comes to credit cards. For example, you can only use Mastercards when cashing out in person or fuelling up on gas at Costco stations.

If you frequently shop at Costco, you’ve likely noticed ads for the CIBC Costco Mastercard. This no-fee credit card doubles as your membership card and offers rewards on your Costco purchases. But is it the best credit card for frequent Costco shoppers? Read on to learn more about the CIBC Costco Mastercard, and find out how you might earn even more rewards with a few alternative credit cards.

CIBC Costco Mastercard review

The pros

The CIBC Costco Mastercard is a no-fee cash back card (just like its predecessor, the Capital One Costco Mastercard). It offers 3% cash back at restaurants and Costco gas stations, 2% cash back at other gas stations—which is handy when you’re on the go—and 2% back when you shop at Costco.ca. For other purchase categories, you’ll earn 1% cash back (including in store at Costco).

This card also comes with mobile device insurance, with up to $1,000 of repair or replacement coverage when you charge or finance the mobile device on your card. With certain eligible purchases, you can also get security insurance and extended warranty insurance. If you meet certain requirements, like having a person income of over $50,000 per year, you may qualify for the CIBC Costco World Mastercard. It’s essentially the same card, but includes World Mastercard benefits like car rental insurance, travel perks and more.

The cons

While the CIBC Costco Mastercard has no annual fee, to truly reap the card’s benefits, you need have to have a Costco membership, which costs either $60 or $120 per year. Another point: there’s no limit on how much you can earn throughout the year. But, the cash back earn rate does come with a cap. When you reach your annual spend in a category, you’ll still earn cash back—it will just be at the 1% rate for the remainder of the calendar year. For gas, you will receive the 3% cash back rate (and 2% cash back rate at other gas stations) only on the first $5,000 charged. After that, you’ll earn the 1% cash back rate. For Costco.ca purchases, the cap is $8,000. After that, you return to the 1% base rate.

And while some cards pay out cash back earnings monthly, straight onto your statement or into your savings account, the CIBC Costco Mastercard gives them to you in the form of gift certificates, issued in January, that you can redeem at Costco.

Frequently asked questions

Costco credit cards in Canada: 3 things to know

Knowing these three things can help you pick a good credit card and maximize your rewards at Costco.

1. With Mastercard, Costco purchases are considered “wholesale club” purchases

And why shouldn’t they be? You may think this is an obvious point that has no real impact on your spending strategy at Costco. And yet it’s probably the most important factor to keep in mind when selecting a Costco credit card. Each credit card network uses merchant codes to determine how purchases are categorized—and, crucially, whether they fall within a rewards bonus category.

With Mastercard, your Costco purchases are “coded” as “wholesale club.” This means your Mastercard with a high earn rate on groceries, for example, might not be rewarding you that well at Costco. Although the BMO CashBack Mastercard offers 3% cash back on groceries, for example, you earn only 0.5% on grocery purchases at Costco, which is 0.5% less than with the CIBC Costco Mastercard.

With this in mind, there are two ways to maximize your rewards when shopping in Costco stores. You can either find a Mastercard with a high earn rate on all purchases (including those at a wholesale club), or find a card that has wholesale club spending as a bonus category. Rogers Red World Elite Mastercard is a good example of the former. There are notably few examples of the latter, but the BMO Air Miles World Elite Mastercard recently became one.

2. Costco.ca accepts Visa—but not American Express

Do you carry a Visa? Good news: You can already shop online at Costco.ca. (See below for a breakdown of accepted payment methods by point of sale.) And if you’d rather not apply for a new credit card just so you can check out in Costco warehouses, there’s a way around the company’s Mastercard-only rules for in-person shopping—it just requires a few extra steps.

Go to Costco.ca and purchase a Costco Shop Card using your preferred Visa credit card. You can buy Costco Shop Cards in denominations of $50 to $2,000, and the cards can be used in stores and online. While only Costco members can purchase Costco Shop Cards, they can be redeemed by non-members in Costco locations, so long as the person gets a one-day shopping pass for non-members at the membership counter. So, in practice, you can buy a $1,000 Costco Shop Card online for yourself (or a friend or family member who isn’t a Costco member) using your Scotia Momentum Visa Infinite, for example. The transaction would earn you $10 in cash back rewards.

This explains why we’ve included a few of the best Visa credit cards in Canada as viable alternatives to the CIBC Costco Mastercard. Note: Costco doesn’t accept American Express cards, period—so you’ll need a Visa for this to work.

3. Costco has its own rewards program

Costco currently has two membership tiers: a base-level Costco Gold Membership ($60 per year) and a higher-tier Costco Executive Membership ($120 per year), but those prices will go up as of Sept. 1 (as noted above). There’s also a Costco Business Membership ($60), which allows you to buy items for business, personal and resale use. Executive members earn a 2% reward on purchases made by the primary and additional cardholders, on the first $50,000 spent annually (for a maximum annual reward of $1,000). Some exclusions apply. Given that they will receive 2% back on many Costco purchases, upgrading to an executive level may be worth it if you spend more than $3,000 per year at Costco—you’d earn $60 in rewards, enough to offset the costs of the upgrade. Note: Executive membership rewards are only issued as gift certificates that can be redeemed in physical warehouses—they’re not true cash.

Payment methods accepted at Costco in Canada

The best CIBC Costco Mastercard alternatives in Canada

If you want cash back

At a glance: On in-store Costco purchases, the Rogers Red World Elite delivers 1.5% cash back on every dollar spent—a full 0.5% more than the CIBC Costco Mastercard. Even better, if you’re a Rogers, Fido or Shaw customer, you’ll earn at a boosted rate of 2% on all purchases. The card’s flat-rate rewards structure means you won’t have to worry about missing out on bonus categories.

If you collect Air Miles

At a glance: For Costco shoppers, the BMO Air Miles World Elite Mastercard just got an upgrade. Thanks to changes introduced by BMO in July 2024, the card now offers 2 Miles per $25 spent at wholesale stores, including Costco and Walmart. Given the approximate value of 1 Air Mile ($0.121), that gives you just under 1% back in travel rewards on purchases at these stores. No other Mastercard offers a bonus rate on Costco purchases—not even the CIBC Costco Mastercard.

If you want cash back from a Visa credit card

At a glance: If you don’t want a Mastercard just to shop at Costco, you still have options. The wholesale retailer accepts Visa credit cards online at Costco.ca. With the Scotiabank Momentum Visa Infinite, you’ll get 1% cash back for your online purchases. Although it offers a much better 4% cash back on grocery purchases made at other stores, the 1% is still better than many other cash back credit cards. The CIBC Dividend World Elite and BMO CashBack Mastercard World Elite come with the same 1% earn rate on online purchases.

You want travel points from a Visa credit card

At a glance: Aeroplan is one of the most best travel loyalty programs in the country. And the TD Aeroplan Visa Infinite will net you 1 Aeroplan point per dollar spent online at Costco.ca. Considering each point is worth an average of $0.02 when redeemed for travel, this card provides a roughly 2% return on your spending—more if you’re buying gas and groceries from somewhere other than Costco.

More of Canada’s bestcredit cards:

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• The best cash back credit cards