Another celebrity relationship is on the verge of breaking: by the end of 2021, CapitalOne will withdraw its partnership with the retail giant Costco.
For those with a CapitalOne Costco credit card (try saying that five times faster), that leaves many questions unanswered. What will happen to your CapitalOne account? Who will Costco partner with next? Can you still use a MasterCard buy Costco pizza and churros?
It’s a mystery, of course. But if there is a question that you can start answering, that’s it: how do you find another credit card? To help you get a clear answer, let’s break down the benefits of the CapitalOne Costco card and see.
CapitalOne Costco Card: The Truth
First off, the CapitalOne Costco Card is a store credit card, which means it’s only available to Costco members. But, unlike other store credit cards, you can use this credit card anywhere Mastercard is accepted, not just at Costco (Cash Back, however, has restrictions).
The card has no annual fee and a fixed APR of 19.75% for all transactions, including cash advances and balance transfers. He can earn 3% cash back on restaurant purchases, 2% on gasoline and up to 1% on all other purchases. The card comes with a series of free benefits (price protection, extended warranty, travel insurance) and can also double as a Costco membership card.
How to choose an alternative
The 3% restaurant cash back is quite lucrative, as are the built-in perks. But, in all truth, it is not an irreplaceable credit card. Maybe the only the benefit you won’t find in other cards is its use as a Costco membership card. Apart from that, you can easily find an alternative.
To get you started, here are three questions you should ask yourself.
1. Do you want another store credit card?
Store credit cards are offered by retailers, such as Loblaw and Canadian tire, and they can usually only be used in this retail store. Some cards, such as the CapitalOne Costco credit card, can be used universally. But the rewards themselves have limits. You can generally only use Cash Back for purchases made at the retailer’s stores.
These limitations are the reason some people call store credit cards âclosed loopâ cards – they anchor you to a specific store. If you shop exclusively at a specific retail store, such as Costco, you might not mind the cash back restrictions. But if you want a card with more universal acceptance and application, you might want a open loop card, or a card that is not marked with a specific retailer.
Truth be told, many open-loop maps, such as a American Express or Visa offers the same or better cash back rewards than the CapitalOne Costco credit card. Earning 3% on restaurant purchases isn’t bad, but many great credit cards in Canada offer far more lucrative rewards.
2. Do you want a credit card with no annual fee?
The CapitalOne Costco credit card didn’t have an annual fee, which, considering you already pay an annual fee to be a Costco member, makes sense. If you don’t want to pay an annual fee, you can still find many great cash back credit cards that don’t require payment to use them.
But before you dismiss the idea of ââpaying a fee to use a credit card, do a cost analysis first. Often the extra cash back rewards on these cards will help you win far more than what you pay to use them.
3. Do you want a credit card with the same benefits?
The benefits of credit cards are built-in guarantees and insurance that you don’t have to pay. For example, the CapitalOne Costco card has some great benefits:
- Price protection: A refund on certain items offered for sale after having purchased them at full price.
- Extended warranty: Coverage that extends your manufacturer’s warranty.
- Rental car insurance: Free coverage for certain incidents if you use the card to pay for car rental.
Fortunately, these benefits are not unique to the CapitalOne credit card. In fact, many good credit cards offer even more benefits than these. If travel and medical insurance is important to you, if you like the idea of ââhaving rental car insurance built into your card, then be sure to look for these benefits when shopping for a new rewards card.
Replace your CapitalOne Costco card with something better
Ultimately, the good news is this: With the large amount of good credit cards in Canada, you shouldn’t have a problem swapping out your CapitalOne Costco credit card for something better. While we don’t yet know what CapitalOne will do once the partnership ends, whether or not it finds a new credit card provider, you can prepare for the long haul by purchasing a new cash back card today.
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This article represents the opinion of the author, who may disagree with the âofficialâ recommendation position of a Motley Fool premium service or advisor. We are straight! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer, so we post sometimes articles that may not conform to recommendations, rankings or other content. .
American Express is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool owns shares and recommends Costco Wholesale, Mastercard and Visa. Foolish contributor Steven Porrello has no position in the companies mentioned.