Cost-benefit analysis of Costco Anywhere Visa Card

As the year-end approaches, it is time to perform a cost-benefit analysis of my credit cards. Here I discuss the Costco Anywhere Visa Card.

The structure is relatively simple. There is no annual fee, but only Costco members can have this card. (The Costco membership fee is $65 for Gold Star, which gives no benefits, and $130 for Executive, which gives 2% cashback. Therefore, conditional on being a Costco member, if one expects to spend more than \(65/0.02=3250\) dollars per year, the Executive membership is better. In what follows, we ignore the membership fee because it is independent of the credit card.) The rewards are

• 5% on gas at Costco,
• 4% on other eligible gas and EV charging,
• 3% on restaurants and eligible travel,
• 2% on Costco purchases, and
• 1% on all other purchases.

In the past, I have blindly used this card for gas (regardless of whether it was at Costco), EV charging, restaurants, Costco, and some travel. This year, I earned the following cashback:

• $1.05 on gas at Costco,
• $8.13 on other eligible gas and EV charging,
• $147.92 on restaurants,
• $172.52 on travel,
• $204.23 on Costco purchases, and
• $6.52 on all other purchases.

Based on this information, we can compute that the average cashback rate was 2.48%. Therefore, it is well worth keeping the card, as the Fidelity Rewards Visa Signature Card gives 2% cashback on all purchases, which is my opportunity cost.

However, my credit card usage was not optimal for several reasons. First, I shouldn’t have spent anything on “all other purchases”, which earns only 1%. This is because the definition of categories is sometimes unclear. For instance, I thought bakeries count as dining out (3%), and rideshares count as travel (3%), but that is not the case. For rideshares, I should use the American Express Blue Cash Preferred Card, as discussed here. Furthermore, I found that booking independent hotels sometimes does not trigger the 3% cashback on travel.

Second, 3% cashback on travel is not necessarily a good deal. Booking travel through the travel portals of American Express, Capital One, and Chase (using the corresponding cards) often gives you 5% cashback.

Third, since the 2% cashback rate on the Costco card is the same as with the Fidelity card, but the latter gives cashback every month, whereas the Costco card gives cashback only once a year, using the Fidelity card is better because we can earn more interest.

Therefore, based on my lifestyle, this card is most suitable for gas, EV charging, and dining out.

Although I like this card overall, the two features that I dislike are:

1. The credit card statement does not show how much cashback I earned through each transaction.
2. Cashback is applied only once a year.

In this sense, I prefer American Express because it is clear what we are earning, and we can redeem points or cashback anytime we want.