Costco Complicating Cross-Border Shopping

Posted September 29, 2014 by CCC Staff in
Photo via flickr  Adam Galloway  CC BY-SA 2.0

Photo via flickr Adam Galloway CC BY-SA 2.0

Cross-border shopping at Costco just got more complicated. News recently broke that negotiations between AmEx and Costco broke down, putting an end to a longstanding agreement between the two. Starting January 1, 2015, the only credit card available to Costco shoppers will be MasterCard. Costco has entered into a new partnership with MasterCard and its Capital One card.

Two Cards Needed for Cross-Border Shopping

While Costco is ending its relationship with AmEx in Canada, that isn’t the case stateside. AmEx is still the exclusive credit card at Costco stores in the U.S. This creates a bit of a problem for cross-border shopping, as you’ll need two different credit cards to shop at the wholesaler.

“For members wishing to pay with credit cards at Costco warehouses after [December 31, 2014], [customers] will need to use a MasterCard in Canada and an American Express card in the United States,” says Paul Latham, Vice President of Membership, Marketing, Services for Costco Wholesale.

The good news is you’ll only have to pay the Costco’s membership fee once – that’s because your membership is accepted globally; it has nothing to do with your credit card. Even though the new co-branded MasterCard will also act as a Costco membership card, you can still purchase a membership on its own. Shoppers can join Costco for as little as $55 per year under its Gold Star Membership.

Cross-Border Card Options

The only real concern is for Costco shoppers who pay by credit card. The good news is there are plenty of no-fee credit cards to choose from. If you only cross the border once or twice a year, it’s best to go with a no-fee credit card to avoid a costly annual fee. You can also still pay by cash or debit, but you won’t receive the same protections or rewards when you pay by credit card. Credit cards often offer enhanced protection on purchases, such as extended warrantees, at no extra charge.

Getting a credit card based in US Dollars is also an option for cross-border shoppers. The benefits are that you will not have to worry about conversion rates. These cards are good if you want all your U.S. Dollar purchases billed and paid for in U.S. dollars. However, not all cards are created equal and some come with hefty annual fees.

The Bottom Line

For Costco shoppers, it’s business as usual until next year when they will have to switch to a MasterCard for credit card purchases. We’ll have to wait and see if the new co-branded Costco credit card is a step up from the current AmEx Costco TruEarnings card. In the meantime, Costco shoppers may consider researching MasterCard offers to see what’s available.