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.
