Capital One Costco Mastercard Review

March 11, 2020
Canadian Credit Card Reviews, Cashback Credit Cards, Credit cards, Travel credit cards
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The Capital One Costco Mastercard® is designed for a specific group of people. It requires you to be a member of Costco in order to apply for it. It has no annual fees, and it offers a great 3% cashback on purchases from restaurants.

If you’re already a member at Costco, this card is a godsend for you. However, for everyone else, it’s mostly lacking in substance because its cashback rate for regular items is pretty low. Also, getting it would mean purchasing a membership at Costco – something non-members might not be too keen on.

This article will cover all the strengths and weaknesses of this card and help you make your mind on whether it’s the right one for you.

So, What Is The Capital One Costco Mastercard?

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In a few words, it’s simply a co-branded cashback credit card by Costco. It’s catered towards people who are looking to give themselves some cashback at high rates. Admittedly, the Capital One Costco Mastercard® does have a great cashback rate. However, it comes at a cost, as you’ll soon find out. We’ll go over the entire card over the article, of course.

This credit card tries to take on multiple benefits in an attempt to attract customers. Unfortunately, it has quite a few problems that make it less than desirable for the average person.

In A Nutshell

CashbackUp to 3%
Annual Fee$0
Interest Rate19.75%

The Lack Of Annual Fees Is Just An Eyewash

At first glance, this card seems pretty alluring due to its lack of annual fees. However, that all comes crashing down when a serious issue with the Capital One Costco Mastercard is unearthed.

It’s only available to Costco members.

You’ll have to become a Costco member if you want to use this card and the membership comes at $60-120, based on the type of membership you opt for. That gives this card a minimum cost of $60, not $0, as the advertisement would lead customers to believe. Even so, $60 may not be a dealbreaker for potential customers, and if you’re already a Costco member, then the card is one huge plus.

The Cashback Offer Is No Different

At least Costco wasn’t vague about this one. Here’s how this card’s cashback works:

  1. 3% cashback at restaurants.
  2. 2% cashback for fuel purchases.
  3. 0.5% cashback for everything else. However, after spending $3,000 for the year, you’ll get 1% cashback on other purchases.

Admittedly, 3% back on purchases is pretty high, but it’s only for restaurant purchases, which is a very limited category (we don’t eat out every day, do we?). 0.5% cashback for most of your yearly purchases, on the other hand, is pretty low, and plenty of other no-fee cashback cards offer a better rate. So, what might seem like an alluring offer isn’t much to behold. Bummer.

If you’re looking for a great cashback card but don’t know which one to choose, read our post on The Best Cash Back Credit Cards In Canada.

What The Capital One Costco Mastercard Offers Besides Cashback

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For Purchases

  • Price Protection: If there’s a discount on a product after you buy it, the Costco Mastercard is here to help. As long as you bought it within 60 days of the discount, this card will pay the difference of up to $100, which is a pretty sweet deal!
  • Purchase Insurance: Theft, damaged good … that sort of thing won’t bother you if this card has your back. Your items are insured for 120 days after purchase.
  • Extra Warranties: You can double the warranty of your purchases for up to 2 years of extended warranty on your purchases with this card. However, you have to pay the full price of the product with this card for that to apply. If you partially cover the cost with gift cards, etc., then you’ll have to work with the regular warranty.

For Travel

  • Life Insurance: If you, your spouse, or your dependent children have an accident that costs them their lives or severe injury, you can receive up to $250,000 in coverage. This is something that not many other cards provide, especially if they don’t charge an annual fee.
  • Rental Car Insurance: You won’t need any car rental insurance if you pay for the rental using this card. You’ll have to cover the entire cost with only this card, of course. You’ll be protected against accidental damage or theft, and not paying for the insurance will save you a lot of money down the line.
  • Baggage Delay Insurance: You can receive up to $300 over the span of 3 days if your baggage is delayed.

Related: The Best Travel Insurance Options In Canada

Additional Perks

  • Mastercard Benefits: Mastercard makes sure you don’t have to worry about lost cards or unauthorized use. You won’t have to pay for any of those, and you’ll receive a card replacement whenever you misplace your credit card.
  • Customizable Alerts: Costco deserves credit for this feature. You can receive text alerts for credit card use which seems suspicious. Other than that, you can also set up alerts for payment deadlines, or for when you’re about to reach your credit limit. It’s handy, simple, and usable for pretty much anyone.

Capital One Costco Mastercard Benefits

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#1 You’ll Only Have To Handle A Single Card

It’s not much. but having this credit card would mean that you won’t have to carry your Costco membership card around. It’s a 2-in-1, which might make it easier for you to handle your wallet. Although, we can’t think of anyone who can’t take care of one extra card in their pocket.

#2 Restaurants Will Be Your Go-To

With 3% cashback on restaurants, you’d better take all your friends out to eat every week. This is probably the best that this card has to offer, and it’s a huge deal. While huge cashback rates aren’t rare as diamonds, it’s still a large amount and worthy of praise.

#3 The Capital One Costco Mastercard Card Can Be Used Anywhere

If you’re worried about being able to use your card when abroad, consider that 43 million locations across the globe accept Mastercard. This card can be used at any one of these, which is great! It’s awesome for travelers, especially given all the travel insurance it brings.

#4 Cashback Applies On Every Purchase

That’s also a benefit this card brings. There aren’t any rules to where you must spend your money with the Capital One Costco Mastercard. Simply have at it. The cashback on gas isn’t gargantuan, but at 2%, it still beats a lot of its competitors. Therefore, eating and traveling are basically a breeze with this card. Travel around on rented vehicles and eat at the best restaurants available.

#5 No Limits On Cashbacks

One of the biggest wins for the Capital One Costco Mastercard is that there are literally no caps on cashback rewards. You can earn all the cashback in the world, and Costco will cheer you on. There are plenty of credit cards out there that put a limit to how much you can earn, so it’s refreshing to see a company choose a more generous route. Good for you, Costco!

There Are Downsides Too, Unfortunately

#1 No Benefits For Purchasing From Costco

A credit card by Costco that has no added benefits for shopping from Costco? It sounds like a bad joke. I mean, are we supposed to congratulate them for being unbiased, or what?

It simply makes no sense whatsoever. Ideally, we’d get extra cashback for shopping from Costco stores, but that isn’t the case.

#2 Only Costco Members Can Get The Capital One Costco Mastercard

You literally have to be a Costco member – no ‘ifs’ or ‘buts’ allowed. For that to happen, you have to cash in a yearly $60 to $120. For people who aren’t really bent on shopping from Costco all the time, this isn’t a great choice of investment.

The aggravating part is that Costco might have gained some new loyal customers if they offered more cashback for shopping from their stores … instead of buying from unrelated restaurants. Talk about missed opportunities!

#3 Cashbacks Are Accessible Only Once A Year

This might actually be a benefit for some people. It depends on the perspective you see it from, but we’d rather have our cashback immediately rather than once a year. Costco, however, thinks it can decide better than you, and thus, delivers your cashback to you in the form of a lump sum every year. You’ll receive all the cashback you earned during the previous year in January.

Before you condemn Costco for this apparently arbitrary move, do try to consider that this isn’t the only cashback card that does it. In fact, plenty of other cashbacks out there will only credit your account once a year, making this the norm rather than the unwanted exception.

#4 Low Cashbacks

Sure, as we said before, 3% at restaurants is awesome, but it’s likely that most people would be spending most of their money on regular items. Those only have a 0.5% cashback. Supposing your yearly expenditure didn’t cross the $3,000 mark, you’ll be stuck with the 0.5% cashback the entire time. It seems pretty dreary, and not worth the effort, nor money, that you’ll invest in this card.

If it weren’t for this low cashback amount, this card would be salvageable. However, at this point, it leaves very little incentive for the customer.

Related: If you shop at Amazon, you may want to check out the Amazon.ca Rewards Mastercard.

Summarizing: The Capital One Costco Mastercard Is For A Niche Audience

Apply for this card if you:

  • Are a member of Costco
  • Love traveling and eating from restaurants
  • Have another credit card for groceries and everyday purchases

If you don’t fit this description, then stay away from this card at all costs. In its current form, this card requires you to be a member of Costco and we’re not sure if they hoped to gain new members through it. One thing is clear, though. This card is not even close to being worth the yearly membership fee for Costco if you’re not already paying for it.

However, if you’re already a member at Costco, then you’re missing out big-time if you don’t have this card in your arsenal. It’s a must-have for you because you’re already paying for the yearly membership fee! You’re safe from the biggest downside this card has.

If you’re a member at Costco, you’re simply getting great cashback for eating at restaurants without lifting a finger – and that’s well worth the 5 minutes it’ll take to sign up for the Capital One Costco Mastercard: