I was having lunch with some friends the other day. They know of my interest in personal finance and so they posed a question to me: “what is the best credit card?” Obviously it’s hard to pick the single best credit card. So I narrowed it down a bit to rewards cards within the American Express card family. I said that the TrueEarnings® Card from Costco and American Express was probably the best. To my surprise my friends pulled out their wallets and proudly held up their TrueEarnings cards. I felt like Carnac the Magnificent.
Truthfully though, I really wasn’t that surprised. It’s the most popular card because it’s one of the best. Today I thought I’d give a quick review of the card and dig into what makes it so great.
About the TrueEarnings® Card from Costco and American Express
The True Earnings® Card from Costco and American Express is not your average rewards credit card. As I said above, it’s one of the top, if not the best cash back credit card available today. This card has no annual fee as long as you are a Costco member ($50 annual fee). For those that may not be familiar, Costco is a membership shopping warehouse. This card is an Amex card, but it’s a flexible payment card. It’s not a charge card. It comes with a nice initial bonus and an excellent rewards system. Before we get on to the reward details, I will add that this card comes with a promotional 0% interest rate on purchases for 6 months.
How the TrueEarnings® Card from Costco and American Express Reward System Works
First, you should know that your spending doesn’t have to be at Costco to earn rewards. With this card, you’ll earn rewards like this:
- 3% Cash Back for Gasoline*
- 3% Cash Back for Restaurants
- 2% Cash Back for Travel
- 1% for Everything Else
*Know that this category is capped at $3,000. Spending above that amount will earn only 1% cash back.
You might be thinking, PT, those percentages are pretty good, but I’m seeing 5% on some cards at other places. While it is true that some cards offer 5%, know that they have spending limits and thresholds, as well as rotating categories. If you’re going to put most of your spending on a credit card, then you might not want to be limited by caps and varying categories. You might need a solid card that is going to perform year over year too. From what I can tell, Amex has maintained a solid percentage on this card over time, and the only cap (if you can call it that) is the drop in cash back % when you reach a certain level of gas spending. It’s hard to beat a solid 3% cash back on dining out expenses.
To cash out your rewards, simply take the annual rebate check that American Express mails you into your local Costco store and either use it to pay for your goods, or cash it out. If you’re looking to max out rewards, you should know that it’s best to cash out your rebate. That way your spending will all go on the card, earning you more rewards.
I did some research on this card around the web and it looks like the average consumer gets around $300 back annually using this card. Not bad.
$25 Initial Bonus
This card comes with a nice initial bonus of $25, which is half of your Costco annual membership. So if you’re looking to join Costco, it might make sense to get this card first. The bonus comes in the form of a statement credit that is applied after you make your first purchase.
TrueEarnings vs Blue Cash
People considering the TrueEarnings® Card from Costco and American Express are often comparing it with the Blue Cash® from American Express. Both are solid rewards cards from American Express. Both have no annual fee and come with the ability to pay over time (i.e. not charge cards). The main difference is the affiliation with Costco and in the rewards system. Let me explain more about the differences in rewards:
The TrueEarnings reward system is pretty straightforward. As shown above, you earn 3% in gas, 2% in dining and travel, and 1% for the rest. You can quickly take your annual spending figures and calculate how much you’ll earn through this system. The Blue Cash system is a bit more complicated. Your initial spending will earn you 1%. When you reach $6,500 in annual spending, you will begin earning 5% cash back.
From what I can tell, the break even for going with the Blue Cash® from American Express vs the TrueEarnings Card from Costco and American Express is around $13,000 in annual spending. So, if you spend less than $13K and you’re a Costco member, go with the TrueEarnings card. Of course this will vary depending on how much gas you use, and likely a few other factors, but you get the idea.
Who Is This Card For?
If you’re comfortable using credit and can pay off your entire balance each month, then you should consider this for your cash back credit card. Not that you have to pay off the balance like a traditional charge card from American Express. It’s just that paying interest charges to carry over a balance will negate any rewards you earn from this card. That’s all I’ll say about that.
Also, if you are already a Costco member and spend heavily on gas, dining, and travel, then this is really the card for you to consider. Many consumers fall into this category. Which explains why many people have and love this card.
Apply for the TrueEarnings® Card from Costco and American Express
“Disclaimer: This content is not provided or commissioned by American Express. Opinions expressed here are author’s alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.”
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Another great card is the National City Everyday Rewards card. 4% on gas and groceries, 3 on movies, 2 on dining out (I believe) and 1 on everything else. All with no annual fee. Why don’t more people recommend this card?