Costco’s Breakup With American Express Is A HUGE MESS

EOD_CostcoAmexMy wife encountered a surprise while booking a hotel room for a trip to Florida we’re planning for the beginning of April. She gave the hotel our Costco American Express card number to reserve the room, and requested an email confirmation. Everything seemed to go smoothly, until she opened up the email. In red lettering was a warning stating that the credit card given expires before the hotel reservation, and that a valid card will be needed when we check in.

Looking at the card, it’s expiration date was not for several months. I was momentarily confused, but then remembered that Costco is ending their relationship with American Express this year, and switching to Visa. Sure that the warning from the hotel was somehow related to this fact, I decided to make some phone calls to find out exactly what what to expect in regards to our rewards credit account.

According To Costco

My wife called Costco first to ask them what the end of their relationship with American Express means to customers that have a Costco American Express rewards credit card. The representative gave the following points information.

  • As of April 1st, American Express will no longer be accepted at Costco stores. On that date, they will begin accepting Visa credit cards instead.
  • They are moving towards using Citi Visa for their rewards credit account.
  • The process of getting Citi Visa on board is currently in underwriting and is not finalized.
  • They are hoping to have everything complete and new cards mailed to customers by April 1st, but cannot promise anything.
  • They are hoping that Citi Visa will just buy the accounts, meaning balances would automatically be moved to the new cards, but that’s not a certainty.

The American Express Perspective

Next, I called American Express to find out what they would say about the situation.

  • The relationship between Costco and American Express will end sometime mid-2016, but they do not have a final date.
  • The termination date will be communicated to customers as soon as it has been determined.
  • While Costco may stop accepting  American Express as of April 1st, the cards will not be shut off until the termination date
  • Current Costco American Express holders will have the option to transition to a different American Express rewards account. The representative was extremely interested in telling me about these options and shockingly encouraged me to move to one as soon as possible.

The thought that came to mind as I was having these two conversations was, “What a complete mess.”

Summary Of The Situation

Let’s summarize just how jacked up this situation is:

As of April 1, my Costco American Express can no longer be used at Costco. They’re switching to Visa, but they don’t know when it will be available, or if current balances will be assumed by the new account. There’s also the question of whether current card holders will have to re-apply for the new card. The representative couldn’t answer that question. Even though my Costco American Express can’t be used at Costco after April 1st, I might still be able to use it elsewhere until mid-2016. They don’t know exactly when it will stop working.  But,they’ll be sure to let me know, and it definitely isn’t already set for March 31st regardless of the warning message my wife got through the hotel reservation system which American Express couldn’t explain.

For a company that’s known for having a great business model by treating their employees well and great customer service, they’ve really done their customers a disservice by how this situation is being handled.

Come on, Costco, you’ve got to do better than this.

Do you have a Costco American Express rewards card?  Have you heard any additional information on this situation?

About Travis

22 Responses to “Costco’s Breakup With American Express Is A HUGE MESS”

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  1. Money Beagle says:

    There’s not much time left, really. We use our American Express card for a lot so we’re very interested to see how it’s all handled.

    I know it’s a big deal for all of the companies involved, but I thought that they already did this transition in Canada with the exact same players, so you’d think they’d have the process a little more defined.

    • Travis says:

      Even if they didn’t have the process defined previously, I would have thought they would know by now *exactly* what was going to happen. I can’t help but wonder if there’s a gap, how many people are just going to switch to a different rewards card and never come back to what Costco will be offering.

  2. I’m not sure this affect COSTCO in the UK. Will have to check it out though. Thanks, Travis.

    • Travis says:

      That’s a good question, Maria…..I guess I just thought of it as Costco worldwide…but MoneyBeagle mentioned this already happened in Canada. Maybe it’s is a US thing?

  3. Kevin says:

    I don’t have a Costco American Express rewards card but I am definitely excited about Costco accepting Visa credit!

    • Travis says:

      I personally couldn’t care less which one they have….I use my debit card 99.9% of the time anyway. But this is an interesting situation to watch! Thanks for reading!

  4. I don’t use credit cards, so this doesn’t impact me. I’m really glad I can say that!

    • Travis says:

      Haha, good for you, Prudence! I use my debit card 99.9 % of the time too….but I just couldn’t believe what a mess this was. I had to look into it!

  5. We have one and I know an insider who works at Costco and there have been very little details given to employees.

  6. Geez, it sounds like they don’t know what’s going on at all!

  7. I can understand Costco’s perspective that they can leverage each card issuer to get a better deal (after all, they do pay a lot of money to whatever company’s cards they accept), but ultimately I think it’s just way too inconvenient for guests. It used to be like this at Subway where they wouldn’t accept Discover, but eventually they got on board.

    • Travis says:

      Sure, I understand that….and moving from accepting AMEX to Visa is one thing (which it sounds like they’re ready to execute on)….but one of their big selling points of their memberships is the rewards cards…and at this point I think they’re going to have a gap between when AMEX goes away, and their Visa comes online.

  8. Yikes, that’s a lot of uncertainty! It makes me very glad I never got a Costco card. I strongly considered it for awhile.

    In the end, I guess what matters is that you don’t lose your rewards points. As much as it sucks to miss out on gaining more, at least you can pay with debit at any point.

    • Travis says:

      It’ll be interesting to see what happens with those too…it’s a cash back rewards program that goes Jan to Jan. So…what happens to any cash back earned from Jan 2016 until the AMEX relationship ends? I guess we’ll find out!

  9. Jim stuart says:

    Passing Costco should take all credit cards for the benefit of their customers and they wouldn’t have this problem.

  10. H says:

    I was lucky enough to be issued a Citi card and it turns out Amex never transferred the account over to Citi (yup, a physical credit card that does not work). Neither any of the 3 companies had a good explanation and Citi and Costco’s solution was to have me apply for a Citi account instead of actually trying to figure out what went wrong. I would normally just end the relationship but decided to downgrade my Costco membership and plan on shopping there only for the bulk items that I really need.

    Poor customer service and no attempt at any accountability whatsoever.

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