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Recently, Capital One ended its coveted partnership with Costco Canada and the Hudson’s Bay Company. Rather than focusing its efforts on relationships with its partners, the company will gradually move toward its own credit card empire. Unfortunately, this marks the end of the Capital One Costco Mastercard.
Since cash back rates for this card are relatively low, its clients aren’t motivated to make purchases at other qualified locations. As a result, Capital One is simply not making enough profit to justify its investment or keep its products in the Canadian market.
Read this to learn what type of effect the Capital One Costco Mastercard ending will have on its consumers and what you can do to recover from the situation in 2021.
Until an agreement was struck with Capital One in 2014, the main credit card company that Costco Canada did business with was American Express. This was a big deal for Costco members, who would later be exempt from interchange fees in Canada.
However, this lack of fees meant the company had to rely on out-of-country purchases to regain its investment. So, it seems that the experts at Capital One have recently realized the opportunities for growth that come from focusing on their own brand.
Recent news announced that CIBC struck a deal with Costco. They will become the next issuer of Costco Mastercards in Canada. According to their press release, CIBC will be taking over Costco’s current credit card portfolio which has more than $3 billion in outstanding balances. This is a big move for CIBC, the acquisition is expected to significantly grow their credit card portfolio and stabilize their positions as the 3rd largest bank in Canada. The new co-branded card will also continue with Costco’s previous payment network as Mastercard.
Capital One Costco Mastercard holders can expect a gradual withdrawal process, wherein Costco members will gradually have their cards and accounts replaced with the new CIBC Costco Mastercard. Replacement cards are expected to be distributed starting early next year in 2022. Till then, existing members can use their Capital One Costco Cards as per usual.
The new CIBC Costco Mastercard is expected to have great benefits and will also be accepted at any store that takes Mastercard. Moreover, the new CIBC Costco Mastercard will also act as your membership card. More news on the card will be released in the coming months as CIBC transitions as Costcos exclusive issuer.
Costco has always stuck to its gimmick of only accepting one credit card brand at a time, which might make things tough on customers who have been relying solely on their Capital One Costco Mastercard to make purchases (rather than their debit card). That said, there are a couple of different alternatives clients can turn to, such as:
At the moment, Costco Canada doesn’t accept American Express or Visa credit cards (Visa debit cards are accepted). The new Costco credit card will also be a Mastercard, so, your best bet is to get a Costco Credit Card if you like the idea of in-store benefits and a regular Mastercard if you want to explore benefits outside the store.
As mentioned, one of the main reasons that Capital One ended its partnership with Costco is that the Capital One Costco Mastercard doesn’t offer up great benefits compared to other cards, especially when it comes to its cash-back rates.
In fact, there are plenty of other credit card providers in Canada offering products that may suit your financial preferences better than Capital One, including but not limited to:
Other cards that are great for making purchases at Costco Canada in 2021:
As you can see, many of these other credit cards come with better rates and benefits than the Capital One Costco Mastercard, so its loss shouldn’t be a huge letdown for the average Canadian consumer. Plus, Costco may begin accepting other providers in the future, like Visa and AMEX (depending on who their next partner is).
Check out our full list of the best credit cards for groceries in Canada.
If you’re losing your Capital One Costco Mastercard because the two companies have finally called it quits, don’t worry. There are plenty of other providers and credit cards in Canada that offer better rates and benefits. Contact Costco customer service to find out when they will no longer be accepting the Capital One Costco Mastercard in 2021.
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Loans Canada is pleased to announce it placed No. 131 on the 2022 Report on Business ranking of Canada’s Top Growing Companies.
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