By now, it’s pretty much old news, though it’s exciting, nonetheless: Canada’s own CIBC will be Costco’s newest credit card partner.
After nearly five years of partnering with Capital One, and 15 years of partnering with Amex before that, Costco and CIBC will try to forge a rewards credit card that will outdo its predecessors and land a place in Canada’s credit card hall of fame.
Is that too much pressure? It’s hardly enough. CIBC already has some of the best credit cards on the market, which makes me feel pretty excited about the CIBC Costco Mastercard (NYSE:MA).
Of course, many people were excited about the Capital One Costco partnership, too, the resulting card of which was a little bit meh. Don’t get me wrong. There were plenty of things I liked about the Capital One Costco Mastercard. But there were plenty of things I didn’t like, too. And if I’m looking ahead to the new CIBC version, here are five things I really hope it doesn’t have.
1. Bottom-tier earn rate for Costco purchases This one seems like a major “duh” to me: if your rewards card is cobranded with a retail store, you’d think the card would reward for purchases made in that store, right?
Well, with the current Capital One Costco card, that’s not the case. Even though this card earns 3% cash back on grocery store purchases, Costco isn’t considered a grocery store. It’s wholesale retailer, which means your Costco Mastercard earns you the base rate — a meagre .5% (after $3,000 spent, 1%).
So, first off, I’d love to see CIBC raise the bar here. Give us a higher earn rate for Costco purchases. At the very least, match the 3% grocery rate with a 3% Costco earn rate, too. That would encourage cardholders to spend more at Costco, rather than buying at grocery stores to get more cash back.
2. Limited redemption options As the card currently stands, you can redeem your rewards points only once a year. Every January, Costco will send you a voucher, which you can then use toward your Costco purchases.
While this isn’t completely rare (after all, Amex does this for many of its credit cards, too), I’d love to see CIBC join the slew of rewards cards that allow more fluid redemption options. Instead of a one-time voucher, let us credit our accounts with our earnings. While Costco is great, we don’t always want to use our cash back there, especially since we’re earning most of our points in grocery stores and gas stations that aren’t Costco branded.
3. A shabby welcome bonus (or none at all) Right now, the Capital One Costco Mastercard offers no welcome bonus. That’s right. You don’t even get a free pumpkin pie with your credit card.
If there’s one thing CIBC is known for, however, it’s not going cheap on its cardholders. Just take a look at its current credit card offers, and you’ll quickly see that CIBC is fairly generous to newbies. At the very least, the CIBC Costco Mastercard could offer a Costco annual membership for free, or a voucher that’s redeemable at the food court.
4. No annual fee I highly doubt the CIBC Costco Mastercard will have an annual fee. After all, you have to buy a Costco membership to get the credit card version. But still, it’s worth emphasizing: when the new Costco credit card comes out, I hope it continues its legacy of charging no annual fees to cardholders.
5. Income requirements Finally, I’d love to see Costco continue its low income requirements for the CIBC-branded card. Right now, you only need a fairly good credit score to get approved. If CIBC amps up the rewards on the Costco Mastercard or gives us a hefty welcome bonus, they may decide to put income requirements in place, such as having an income of $60,000. I really hope they don’t do this, as many Canadians, middle income or not, shop at Costco, and it would be beneficial to have a low barrier of entry.
When will the CIBC Costco Mastercard come out? Right now, the date hasn’t been announced, though it looks like it will come out in the beginning of 2022. We’ll keep you posted when it does.
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The Motley Fool owns shares of and recommends Costco Wholesale (NASDAQ:COST).