4.5 Things You Should Never Buy With Your CIBC Costco Mastercard

The CIBC Costco Mastercard will be available March 4.

Double exposure of a businessman and stairs - Business Success Concept

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

The new CIBC Costco Mastercard has some exciting perks: 3% back at restaurants, 3% back on Costco Gas, and 2% back on Costco.ca purchases. The base rate is fairly standard (1% back), but hey — at least it’s no longer the meagre 0.5% the Capital One version gave us.

With those three bonus rates, the earnings on this card could be immense. That said, it’s not the best all-around rewards card, and I definitely wouldn’t use it for every purchase.

In particular, here are four-and-a-half things you should never buy with your CIBC Costco Mastercard.

1. Groceries

The new Costco rewards card might earn you 3% back at restaurants. But the “food” earnings stop there. If you cover your grocery bills with the Costco Mastercard, you’ll earn a meagre 1% back, which is far below what you could earn on Canada’s best cash-back cards.

The only time I would buy groceries with this card is through Costco.ca. When you buy groceries at Costco.ca, you’ll get 2% back, up to $8,000 spent ($160 earned). If you plan on grocery shopping outside of Costco, however, I would get a cash-back card that offers you a higher bonus rate.

Many no-fee cash-back cards have 2-3% bonus rates for groceries. Others will give you 4-5% back, though you’ll often have to pay an annual fee for the higher rate. Still, it could pay to have one of these cards in your wallet, as the higher earnings will often outweigh the fee.

2. Costco items

Again, the CIBC Costco Mastercard earns 2% at Costco.ca. But if you shop frequently at Costco warehouses, your card will earn a whopping 1%.

That’s not horrible. But you want to earn more, I recommend getting a cash-back card with a 2% flat rate. That way you can earn 2% for Costco purchases made online, as well as those in-store.

3. Plane tickets

I would never use the CIBC Costco Mastercard to buy plane tickets, not only because you’ll earn very little in rewards, but also because this card doesn’t come with travel insurance.

That might come as surprise. After all, the card does have mobile device insurance, an extended warranty policy, and purchase protection built into it. And the Capital One Costco Mastercard did have travel insurance, including travel accident insurance, baggage delay insurance, 24/7 travel assistance, and rental car coverage.

But not the CIBC Costco Mastercard. When you use this card to cover travel purchases, you’ll have no free insurance. Not even travel assistance. For travel purchases, you’re better off using a travel credit card — or any card with travel insurance, for that matter.

4. Rental cars

Using the same argument above, I wouldn’t use this rewards card for rental cards. Most credit cards come with rental car insurance, which can cover a portion of your liability or accident costs. The CIBC Costco Mastercard, however, doesn’t have this insurance built into it.

The “half” thing: Gas

Gas is tricky (that’s why it’s “half” of a thing). If you’re planning on filling up at Costco Gas stations, then, yes, you should absolutely cover your gas bill with this card. You’ll earn 3% when you fuel with Costco Gas, which is exceptionally good for a no-fee rewards card.

Outside of Costco Gas stations, your card will earn 2% back. That’s not terrible. But with gas prices as high as they are, you could earn more with another cash-back card. Some cash-back credit cards will let you earn 3-4% back at all gas stations.

Again, if you’re planning on using your Costco rewards card at Costco Gas stations, by all means — use it for gas purchases. Otherwise, I’d take a look at Canada’s top credit cards to see if you can find one that earns you more.

Should you get a CIBC Costco Mastercard?

Frequent shoppers at Costco would do well to apply for this new credit card. That said, if you want to maximize your earnings at grocery stores and gas stations, you definitely want another cash-back credit card, as the new Costco rewards card isn’t the most lucrative card out there.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool recommends Mastercard. Fool contributor Steven Porrello has no position in the companies mentioned. 

More on Personal Finance

Female hand holding piggy bank. Save money and financial investment
Personal Finance

Here’s Why a Big Emergency Fund Is a Terrible, Terrible Idea

Here's why saving more than six months' worth of expenses can be disadvantageous to your household.

Read more »

cup of cappuccino with a sad face
Personal Finance

5 Super-Simple Ways to Completely Ruin Your Credit Score

Building your credit score takes time, dedication, and smart decisions. Tearing your credit score apart — well, you could do…

Read more »

Young woman sat at laptop by a window
Personal Finance

5 High-Paying Side Hustles That Could Help You Save for Retirement in 2022

If you're struggling to save for retirement, here are five side gigs that could give your retirement fund a boost.

Read more »

Hour glass and calendar concept for time slipping away for important appointment date, schedule and deadline
Personal Finance

The Tax Deadline Is Almost Here! Here Are 5 Things You Need to Know if You Haven’t Filed Yet

The deadline to file your taxes is May 2. If you haven't started yet, here's what you should know.

Read more »

consider the options
Personal Finance

New to Investing? Be Sure You Avoid These 5 Newbie Mistakes

If you're new to investing, here are five big mistakes you should watch out for.

Read more »

Couple relaxing on a beach in front of a sunset
Personal Finance

Lazy Canadians: Here’s How You Can Make $200 Per Week in Passive Income

To earn $200 a week, invest money in high-quality stocks or ETFs.

Read more »

gas station, convenience store, gas pumps
Personal Finance

Costco vs. Canadian Tire: Which Rewards Card Will Save You More on Gas in 2022?

The CIBC Costco Mastercard earns 3% back at Costco Gas, and the Canadian Tire Mastercard earns 10 cents per litre.…

Read more »

young woman celebrating a victory while working with mobile phone in the office
Personal Finance

Finally! Apply for a CIBC Costco Mastercard Now to Get a Welcome Bonus!

From now until December 31, 2022, CIBC will give you a welcome bonus on the new CIBC Costco Mastercard.

Read more »