Capital One: Costco Cash Back Mastercard Review

This week, I will be reviewing the Capital One Costco Cash Back Mastercard. A lot of my coworkers use this credit card because of the perks it provide. I personally do not have this card as I do not own a Costco membership, nor do I plan to. I simply do not buy enough to warrant the need to get a Costco membership. That being said, let’s begin with the review.

Pros:

  • No annual fees
  • Doubles as your Costco membership
  • 3% cash back on restaurant purchases
  • 2% cash back on gas purchases

In Canada, the rule of thumb is that any cash back rate above 1% is considered good. At 3% cash back on restaurants and 2% cash back on gas purchases, this credit card put it among the best in those categories. In addition, there are no annual fees and the card doubles as your Costco membership. This saves you the hassle of bringing extra cards when shopping.

Cons:

  • 0.5% on the first $3,000 you spend annually on all other purchases, and 1% after that
  • Capital one just announced that it will end its relationship with Costco near the end of 2021
  • Restricted to Costco members only

You must have a Costco membership to apply for this credit card. People like myself who do not shop at Costco will unfortunately be left out. Although the Costco Cash Back Mastercard has a good cash back rate on restaurant and gas purchases, the rate on other purchases is quite subpar. 0.5% cash back rate simply does not cut it and you only get 1% after you spend $3,000 for the year. In addition, Capital one just announced that it will end its relationship with Costco by late 2021 due to their internal struggles and wanting to focus on their own line of products. I am confident that Costco will easily find a replacement partner but there is still uncertainty as to whether the rewards will change for the better or the worse next year.

Conclusion

The Capital One Costco Cash Back Mastercard is good to use at restaurants and gas stations. All Costco members should have this card as a secondary credit card. This should not be your primary credit card due to the low cash back rate. Having a 0.5%-1.0% cash back rate on non-restaurant or gas purchases is quite suboptimal. You are better off having a higher cash back credit card like the Roger World Elite Mastercard and using this card only for restaurants and gas purchases. This technique is something my coworkers use, and I suggest that you do the same.

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