Costco only accepts Visa cards, and members must use a Costco Visa to earn rewards
Costco stopped accepting American Express, Discover, and Mastercard in 2016. Today, the warehouse will take any Visa card — yours, a family member's, a business Visa — but if you want to earn cash back or other rewards on your purchase, you need a Costco Visa, which is issued by Citi.
This is not a suggestion or a preference. It is a hard rule. If you hand a cashier an American Express or Mastercard, they will decline it. A Discover card will not work either. The only exception is gas stations in the Costco parking lot, which accept all major cards.
The reason Costco made this switch was financial. Visa charged lower processing fees than American Express, and Costco negotiated a deal where Citi would issue the Costco Visa and Costco would get a cut of the rewards revenue. That deal made sense for Costco's bottom line, and it has stayed in place for over eight years.
Key Takeaways
- Costco accepts any Visa card for purchases, but only the Costco Visa earns cash back rewards.
- American Express, Mastercard, and Discover cards will be declined at Costco warehouse checkouts, though they work at Costco gas stations.
- The Costco Visa is issued by Citi and comes in two versions: one for regular members and one for business members.
- You do not need a Costco Visa to shop at Costco, but you will not earn rewards without one.
- If you have an old Costco American Express card, it stopped working in 2016 and cannot be reactivated.
The two versions of the Costco Visa and what each one covers
Citi issues two separate Costco Visa cards. The Costco Anywhere Visa Card is for regular members shopping at Costco warehouses and online. The Costco Business Visa Card is for business members and covers purchases at Costco Business locations.
Both cards earn 1% cash back on most Costco purchases, 2% on gas and travel, and 3% on dining and travel. The rewards are paid as an annual rebate that shows up in your Costco account, not as points you redeem. You can use the rebate to buy anything at Costco or withdraw it as a statement credit.
The business card has a higher annual fee ($110 versus $65 for the regular card) but offers additional perks like extended purchase protection and higher cash back on some categories. If you are a business member, you can only use the business card at Costco Business locations and earn rewards there. You cannot use it at regular Costco warehouses.
What happens if you try to use a different card at checkout
The Costco payment system is programmed to accept only Visa. When you swipe or insert a Mastercard, American Express, or Discover card, the terminal will reject it. The cashier cannot override this — it is a system-level block, not a policy they can bend.
If you do not have a Visa card with you, you have two options: pay with cash or debit, or leave and come back with a Visa. Costco will not hold items, and you cannot use a phone payment app like Apple Pay or Google Pay to work around the Visa requirement, because those apps still route through your underlying card network.
The one place this rule does not explore is the Costco gas station. Gas pumps accept Visa, Mastercard, American Express, and Discover. This is because Costco does not control the gas pump payment system the same way it controls warehouse checkouts.
Why Costco made this change and what it means for your rewards
In 2015, Costco and American Express ended their partnership after 16 years. American Express charged Costco higher processing fees than Visa did, and Costco wanted to lower its costs. Citi offered a better deal: Citi would issue a Costco-branded Visa, and Costco would receive a percentage of the rewards revenue Citi collected from cardholders.
This arrangement benefits Costco financially, which is why the company has kept it in place. It also means Costco has less incentive to negotiate better rewards rates, because Costco profits when cardholders earn more rewards. The cash back rates have stayed the same since 2016.
For you as a shopper, this means you have no choice if you want rewards: you must use the Costco Visa. You cannot earn cash back with any other card, and you cannot negotiate a better rate. If you do not want a Citi card in your wallet, you can still shop at Costco with any Visa, but you will not earn anything back on your purchases.
How to get a Costco Visa if you do not have one
You can open a Costco Visa account online through Citi's website or in person at a Costco warehouse. The process takes about 10 minutes. Citi will run a hard credit inquiry, which temporarily lowers your credit score by a few points.
You do not need to be a Costco member to open the card, but you do need to be a member to use it at the warehouse. If you are not a member yet, you can join Costco at the same time you open the card, or open the card first and join later.
The card arrives in the mail within 7 to 10 business days. Once you have it, you can use it at any Costco warehouse or online at Costco.com. Your cash back rebate is calculated once per year and posted to your Costco account in December.
What to do if you have an old Costco American Express card
If you have a Costco American Express card from before 2016, it no longer works at Costco. American Express and Citi both stopped honoring it at Costco warehouses in 2016. You can still use it at other merchants that accept American Express, but not at Costco.
You cannot reactivate the old card or convert it to a Visa. Your only option is to open a new Costco Anywhere Visa Card through Citi. If you were a long-time American Express cardholder, Citi sometimes offers a sign-up bonus to new applicants, though the bonus amount varies and is not may provide.
Using a Visa debit card or prepaid card at Costco
Any Visa debit card will work at Costco checkout, including bank debit cards and prepaid Visa cards. However, you will not earn any cash back or rewards unless you are using the Costco Visa credit card specifically.
If you prefer not to carry a credit card or want to limit your spending, a Visa debit card is a valid way to shop at Costco. The transaction works the same way as a credit card at the register. You will not earn rewards, but you also will not carry a balance or pay interest.
Frequently Asked Questions
Can I use my Mastercard or American Express at Costco if I call ahead?
No. The payment system at Costco warehouses is programmed to reject all cards except Visa, and this cannot be overridden by a manager or by calling ahead. The only way to pay with a non-Visa card is at a Costco gas pump, which accepts all major card networks.
Do I lose my cash back if I pay with a regular Visa instead of the Costco Visa?
Yes. Only the Costco Visa earns cash back at Costco. If you use any other Visa card, you earn nothing, even though the transaction goes through. The Costco Visa is the only card that triggers the rewards calculation.
What if I use someone else's Costco Visa to pay for my purchase?
The transaction will go through, but the cash back will be credited to their Costco account, not yours. You can use someone else's card to pay, but you cannot earn rewards on a purchase you did not make with your own card.
Does the Costco Visa work online at Costco.com?
Yes. The Costco Anywhere Visa Card works both in warehouses and on Costco.com and earns the same cash back rates. The Costco Business Visa works on Costco.com for business members. Regular Visa cards also work online, but without earning rewards.
Can I use a Costco Visa at other stores, or is it only for Costco?
The Costco Visa is a regular Visa card and works anywhere Visa is accepted. You earn 1% cash back on most purchases outside Costco, and higher rates on gas, travel, and dining. The rewards are the same whether you use it at Costco or elsewhere.