CIBC Replacing The Capital One Costco Mastercard

CIBC Replacing The Capital One Costco Mastercard

Written by Bryan Daly
Fact-checked by Caitlin Wood
Last Updated December 8, 2021

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.  

Why Is Capital One Ending it’s Partnership With Costco?

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. 

Who Is Replacing The Capital One Costco Mastercard?

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.

What Does This Mean For Capital One Costco Mastercard Holders?

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.

Should You Get The New Branded Costco Credit Card Or A Regular Mastercard? 

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:

  • The Branded Costco Credit Card – Members can sign up for their own Costco Credit Card, which allows them to shop and collect in-store reward points, as well as other benefits that will justify the yearly cost of their membership.
  • Regular Mastercard – Thankfully, Costco Canada will continue to accept most other types of Mastercards. If you do research, you may even find a card that offers better benefits and rates than the Capital One Costco Mastercard. 

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.

Alternative Options To The Branded Costco Credit Card

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:

  • BMO – The Bank of Montreal offers a ton of different Mastercard options, like the BMO World Elite Mastercard, which provides many travel benefits, as well as a welcome bonus of up to 30,000 points. If you’re looking for rewards when gassing up your car, there’s also the Shell AIR MILES Mastercard.
  • NBC – The National Bank of Canada also offers several Mastercards. For example, the NBC World Elite Mastercard lets you earn 2 points per dollar you spend, including on purchases from Costco. The NBC Allure Mastercard donates 10 cents for every $10 you spend to the Quebec Breast Cancer Foundation. 
  • MBNA – The MBNA Corporation offers the Best Western Rewards Mastercard, which has no yearly fee and gives you 20,000 Best Western points upon your first purchase. The MBNA Smart Cash Platinum Plus Mastercard gives you 2% cash-back on gas and groceries (more than the Capital One Costco Mastercard). 

Other cards that are great for making purchases at Costco Canada in 2021:

  • HSBC World Elite Mastercard – Perfect for travel purchases, this top-tier Mastercard allows you to earn 6 points per dollar spent on travel purchases and 3 points per dollar on all other eligible purchases, including those from Costco. While the annual fee is high ($149), you also get $100 in yearly travel credits. 
  • BMO AIR MILES World Elite Mastercard – This travel-based rewards card gives you 3 miles per $12 dollars spent at participating AIR MILES Partners and 1 mile per $12 spent at Costco or Walmart. Although the card normally costs $120 a year, the annual fee will be waived for the first year when you sign up.  
  • BMO CashBack World Elite Mastercard – This BMO Mastercard also comes with a $120 annual fee which gets waived for the first year. Customers can earn 2% – 5% cash-back on select purchases too, including 5% on groceries for the first $500 spent monthly and 1% at all other eligible locations, such as Costco. 
  • NBC World Elite Mastercard – The National Bank of Canada World Elite Mastercard involves a slightly higher annual fee of $150. However, the high cost can be worth it considering all the benefits you get, like 2 points per dollar spent at eligible stores (Costco, etc.), along with up to $250 in yearly travel credits. 

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.

Capital One Costco Mastercard FAQs

What happens if you have a Capital One Hudson’s Bay Mastercard?

Luckily, the Hudson’s Bay Company has secured a new partnership with a Winnipeg-based provider; Neo Financial. If you currently have a Capital One Hudson’s Bay Mastercard, you’ll have to re-apply to access this new card after their current partnership ends (you won’t automatically receive it by mail). 

How many points do you get with the Capital One Costco Mastercard?

For now, customers can continue to earn 3% cash-back at restaurants, 2% on gas and 0.5% – 1% on all other purchases at participating locations, including Costco. Sadly, despite the benefits involved for Costco members, these low rates are partially responsible for bringing the Capital One and Costco partnership to a close. 

Will Mastercards still be accepted at Costco?                      

Costco Canada still accepts Mastercard as its preferred credit card brand. On the other hand, there’s no telling if that will change following the end of the Capital One Costco Mastercard and the dissolving of their partnership. Who knows? Costco may end up eliminating Mastercard altogether in favour of Visa, AMEX, or another provider.

Not Sure Which Credit Card You Should Choose Next?

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.  

Rating of 4/5 based on 27 votes.

Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and travelling the world in search of the coolest sights our planet has to offer.

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