Is the Costco TrueEarnings Amex actually the most generous UK travel credit card?

Whilst Head for Points focusses heavily on the Gold, Platinum, Starwood and British Airways American Express cards, there are some other products in the portfolio.  There is the Nectar card, the Platinum Cashback cards and a Harrods card.

And the Costco TrueEarnings American Express card.

The representative APR is 19.9% variable.

American Express has recently lost its contract to issue Costco credit cards in the US.  This was a huge blow to the company, representing 10% of its global business.  The UK card appears to be staying with Amex for now, however.

Costco Amex

For people who don’t know Costco, it is a US-based chain of – effectively – cash and carry warehousesThere are 27 sites across the UK, listed here.  They sell a huge range of items and whilst the stores may be cheap-looking the products are not – wine buffs, for example, tend to swear by Costco for cheap Cloudy Bay and Dom Perignon.

In theory, you need to be ‘in business’ to become a Costco member.  In practice, their rules are pretty lax and you may well qualify for individual membership.  Anyone who works in finance, or is a retired employee of a bank, qualifies for example.  There is also a long list of professional bodies that are accepted.  You can see more details here.  If you are self-employed you are definitely OK.  Some big corporates also have company-wide deals for their employees.

Individual membership is £25 + VAT per year.  You should save that pretty quickly.

The Costco TrueEarnings American Express card

The Costco Amex is a very interesting card.  You can find full details on the American Express website here.

There is no sign-up bonus but that is offset by some very generous returns:

No annual fee

1% cashback on all of your spending (capped at £300 per year)

3% cashback on all of your restaurant spending (no cap)

2% cashback on all of your travel spending (no cap)

You can probably see what got me interested here.  If you are a heavy traveller, 2% cashback on all of your travel costs could be a significant amount of money.

There is the usual 3% foreign exchange fee, so if you are spending money on travel abroad you would be better of with an ‘FX free’ card like the Post Office or Halifax Clarity.  If you are paying travel bills abroad and getting repaid by your employer, however, this is very interesting.

It is also a great result for travel spend denominated in £.

Even the 1% cashback on all of your general spend is a decent deal given that the card has no fee.

Note the small print on the cashback

There is one tiny snag on the cashback.  You do not receive cash from Amex – you receive a Costco voucher.  The voucher can be exchanged for cash, but you will need to visit your nearest Costco store to exchange it.  Costco will also take the voucher in payment for goods – but you can ask for cash if you want.

This card only works well for a selected group of people:

You need to qualify for Costco membership

You need to live fairly close to a Costco in order to pick up your cash at the year end

You need to be putting a significant amount of travel spend through your card – and if this spend is in foreign currency, it needs to be your employers spend and your not your own

You would, of course, be giving up Avios points or whatever reward you currently earn when you pay for travel spend.  Except in a very few cases, though, you will find 2% cashback to be a better deal than whatever else you are getting.  Even if you think the miles you are getting are worth 2% or more, cash is substantially more flexible!  You never get availability problems when using cash …..

You can find further details of the Costco Amex on their website here.

(Want to earn more miles and points from credit cards?  Click here to visit our dedicated airline and hotel travel credit cards page or use the ‘Credit Cards Update’ link in the menu bar at the top of the page.)

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  1. Amex lost the Costco issuing deal in Canada first about 18 months ago and then lost the US deal. In Canada, Capital One / MasterCard are the issuer. In the US, Citi/Visa are which starts in a couple months I believe. Rubbish Canadian card – better off with many other options.

    In North America, there is no requirement to be a Coscto member – anyone can be.

    Also, some Costco stores have petrol stations which offer petrol anywhere from 4-10% cheaper per litre than other places! Just that pays for the annual fee after about 3 months for the average driver!

    • Nicola Walton says:

      The Sheffield Costco has a petrol station and it’s a good 5p a litre cheaper for petrol .

    • Guesswho2000 says:

      Costco Australia will also stop taking Amex as of next month, so the UK seems to be the odd one out here!

  2. Definitely interesting on the travel front. Just getting towards my 20k Nectar bonus then might switch to this (already got my 20k SPG and 9k Avios bonuses this year!)

  3. Where’s the moral tipping point on assuming an employer will reimburse travel expenses when an employee deliberately paid 3% more than they needed in order to personally benefit from what is a business expense?

    • 3% fee is pretty standard on overseas spend. If your employer has not issued you with an fx free card, they’re likely to be paying it anyway – even if it’s not a personal card. So, no ethical problem.

      One of my previous employers used to pay travel expenses out before my CC bill came in. I just whacked it into a high interest savings account (remember them?) until the bill came in and got the interest on it for a month. I usually had a couple of grand in there over the year.

      • What about 4 x TSB accounts @ 5% up to 2k – usually covers my CC bill. Nice little bonus for getting my expenses done in a timely manor…

        • huh? Only makes sense if you don’t have 8k of your own money to put in those accounts…

          Anyway only 1 TSB per person available to new applicants

          • Spend 8k on expenses and hold in those 4 accounts until card needs paying. Dont see why I need my own money in there. 2 available – 1 sole and 1 Joint…

    • employers have an implied duty to keep employees reasonably happy, ie most would not insist on ‘cheapest option, always’ but on ‘cheapest reasonable option according to our company rules’.

      • I’m not sure many employers would be happy if you told them you’ve deliberately increased your expense bill by 3% because you’re getting a kickback off it…

        That being said, I’d personally have no moral qualms doing so if I was satisfied the company could afford it without hardship.

        • My company actually sets their own FX rate which the expense software defaults to and cannot be manually changed.

          So I use a FX free card to avoid paying out of my own pocket….. even then the company still makes .5%-1% out of me as the exchange rate they set monthly benefits the company about 10 months of the year on average, with only a couple months it seems to swing in the employees favour.

    • Surely this is a question that can only be answered by your own finance department or your boss/manager.

      The real question is, what would HMRC say?

    • Genghis says:

      But I didn’t know it cost 3% more to pay with that card… Sorry boss

      • hehheh

        99.9% of companies will not care about 3% more on one card vs another

        you can be pretty sure the FD is doing rather better at it than yourself

        • There’s a difference between not caring and not noticing. As I said, I personally don’t have any major issues with it but it’s akin to theft. I see no moral difference between doing this and getting a taxi driver to write a receipt for £60 on a £40 journey so you can pocket the difference. There’s a legal difference of course, but not moral (unless your employer approves the kickbacks, which I’m not convinced many would if you explained it honestly but supposedly they will).

          • nah :)

          • If my employer doesn’t want to give me a company credit card and I happen to have one with no foreign fees (most people won’t) then I am not obligated to use it for expenses. Maybe I have some personal spend coming up and I don’t want to reach the credit limit on that card while waiting for my expenses to be reimbursed. It’s a bit different getting a taxi driver to write a dodgy receipt.

          • Swad Wolf says:

            I don’t agree with the ‘taxi receipt’ analogy. I travel for work and pay for everything on one of my own credit cards. I then submit my expenses using the amounts on my credit card statement (which will include the 3% FX fee). I have BAPP, Amex Gold and IHG Visa cards and will use whichever suits me in terms of earning preference at that particular time.

            Are you saying that I should apply for a ‘no FX fee’ card purely to save my employer the 3% FX fee or otherwise consider myself a thief? Seems a bit harsh.

            We do not have company credit cards so I am effectively funding the company between incurring the expense and being reimbursed anyway. Can’t say that I feel at all guilty about this, the FX fee is part of the cost of doing business outside the UK as far as I am concerned.

            • Well said, good summary. Agree very different to a tax receipt for a cost not actually incurred.

    • RIccati says:

      First, a lot of this going on around. It’s very likely that ALL (100%) corporates will have credit cards with c.3% FX loading.

      RBS, Barclays, Santander are active on Business Accounts front and all have the fee for spending in foreign currency.

      Second, that 3% fee goes directly to profits of a UK bank who issued the card. It does not stay abroad.

      What has to be challenged is the banks’ cartel behaviour on everyone charging 3% fee on foreign transactions. That is presumably on top of part of merchant fees they will receive for the trouble of processing, so pure profit.

      Perhaps, in the past (70es and 80es) when currency spreads even for G7 countries were wide and markets were less optimal 3% cushion was justifiable (as bank could have lost on conversion because it was not on wholesale market, not real-time — by the time transaction info reached the bank on tape the currency moved). Today, banks have transaction info pretty much in real time.

    • No employer expects there staff to have a credit card with no foreign fees so it is pretty normal for them to be paying the 3%.

  4. David Douglas says:

    I think their website,(and hence your article) is misleading to say they have stores throughout the UK, when there are none in Northern Ireland – throughout Great Britain is more accurate !!!

    • Well, yes you’re correct in saying that Northern Ireland is in the UK but not in GB however these two are often interchangeable (incorrectly I must add though). For example car registration plates in the UK including Northern Ireland display GB.

      I don’t think that attacking the author in this instance is fair. Besides he writes fantastic articles and if you read more into what he writes and be less pedantic you may learn something. (Without the exclamation marks x 3)

  5. Felix Flyer says:

    £20 off £50 spend on Pizza Express at card member may stack nicely with the 3% on restaurant spend.

  6. How is ‘travel’ spend defined/identified?

    • I tried to find the answer to this but couldn’t. I imagine it is based on the industry sector code Amex gives to the merchant.

      • London Transport may well be included in the “travel” category. It was (usually) for my first year Amex Gold bonus points.

  7. I’m not a very big costco fan. A lot of people think its cheaper, but if you do your research you will notice other places often have better products.

    And this AMEX card is ok, but its far down my list and I will probably never apply for it, A lot better AMEX cards out there before this one.

  8. I totally get the point that cash is more flexible than points. But that totally takes the fun out of this hobby! There is something immensely satisfying about building up and spending points balances. The wife hates it. But you can bet that she much prefers it when I tell her that the holiday cost £x + 100y Avios + 200z HHonors. If instead I tell her that our holiday cost £(x+y+z) the reaction would be HOW MUCH did you spend? We can’t afford that!
    So actually, this is a way to sneak a more expensive holiday through approvals! Even if it does drive her mad in the process…

    • Agree. I can convert Amex points, which can be turned to cash, to hotel points where I may get grief for paying cash!