Costco and AmEx breakup

MichaelB

MichaelB

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(Reuters) - American Express Co (AXP.N) said Costco Wholesale Corp (COST.O) would stop accepting its cards in the United States from next April, after the companies failed to reach terms on renewal of an agreement.
American Express shares fell about 3 percent to $83.65 in premarket trade.
Costco has already replaced American Express with Capital One Financial Corp (COF.N) as its credit-card issuer in Canada, starting this year.
"We were unable to reach terms that would have made economic sense for our company and shareholders," American Express CEO Kenneth Chenault said in a statement.
The current agreement is set to end on March 31, 2016, American Express said.
Costco has 468 warehouses in the United States and Puerto Rico, and caters to relatively higher-income customers than Wal-Mart Stores Inc (WMT.N) and Target Corp (TGT.N).
 
That's unfortunate- DH and I are having a great ride with our Fidelity Amex (2% cash back on everything ) at Costco. It will be interesting to see what new deals we offer- may have to get a Costco-branded card.
 
I wasn't aware that Costco only took Amex in their stores. I use Amex so never really gave it a thought. Will be interesting to see what happens if they sign Capital One as they did in Canada. Will we all have to get a Capital One card or will any old type of Visa card work?
 
Interesting. I am a Costco member. Might be negotiating gamesmanship, there's still plenty of time to reach an agreement, we'll see - though if they failed to reach agreement in Canada...
 
We decided earlier this month to drop the Costco and Amex Card it is associated with. Our earnings were less than the renewal fee.

Overall it was a very good experience, but BJs has opened a store about 1 mile from us, so it is time to move on.
 
athena53 said:
That's unfortunate- DH and I are having a great ride with our Fidelity Amex (2% cash back on everything ) at Costco. It will be interesting to see what new deals we offer- may have to get a Costco-branded card.
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+1. I wonder how this will affect other Costco - AmEx relationships like Costco's peddling Ameriprise insurance, for example.
 
Well it means I won't be a Amex customer much longer. I only have it because of Costco and the return due to the cash back covers the fees. Otherwise I will not have a fee based CC. Too bad since Amex was actually pretty good for things like travel but I suspect there are a number of the other cards that are similar these days
 
Not accepting AMEX or Discover is a risky move for most retailers, restaurants, etc. With the notable exception of Joe T's in Fort Worth, I won't go back to a merchant that refused my AMEX. I realize they charge exorbitant fees, but a business owner has to weigh that cost against the top-line risk of losing customers. If your business is extremely popular, you might get away with it.

Costco has a cult-like following, so I doubt they will lose much revenue. Personally, I dislike Costco for many reasons and haven't been there in years. This fallout with AMEX just adds to the list of reasons to avoid them.
 
According to this WSJ article the co-branded Amex Costco card will not be usable anywhere after the split.:( I will end up getting whatever the new Costco card is.

"The partnership will dissolve as of March 31, 2016, meaning that Costco won’t accept AmEx at its stores after that and customers with the “co-branded” TrueEarnings Costco-AmEx card won’t be able to use it anywhere else either."

What the Costco-AmEx Split Means for Shoppers - MoneyBeat - WSJ
 
Cobra9777 said:
... Personally, I dislike Costco for many reasons and haven't been there in years. This fallout with AMEX just adds to the list of reasons to avoid them.
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To each their own, but I didn't see any of those supposed issues as valid, at least for me. A couple marginal ones are probably not much different from other stores (people only stop their carts in the aisles of Costco?).

My AMEX is no fee (though you need to keep some funds at Fidelity, but that is already done for me.

-ERD50
 

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Hope the next deal is with master card since we just got the Citi double points. Only use amex at costco so definitely dropping amex next year if costco doesn't renew.
 
Midpack said:
Wonder if this is what the US will go to? Works for me - since we don't have MC, and it will probably be accepted in (way) more places than AmEx was/is.

Capital One Platinum MasterCard exclusively for Costco Members - Apply | Capital One Canada
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The benefits look the same as the current Costco AmEx card. I only use AmEx at Costco, so no bother to me if it's now MasterCard.

The only downside is that AmEx supports automatic downloads of transactions into MoneyDance (or Quicken). That is a nice feature and one that I'm guessing Capital One won't support.

I just thought of one more benefit to AmEx. I've used their car rental insurance for longer rentals, where for $25 they are your primary coverage. I'll have to look into that one some more.
 
athena53 said:
That's unfortunate- DH and I are having a great ride with our Fidelity Amex (2% cash back on everything ) at Costco. It will be interesting to see what new deals we offer- may have to get a Costco-branded card.
Click to expand...
I believe that Fidelity also offers a 2% rewards Fidelity VISA, and that is what we will switch to assuming that Costco accepts Mastercard and VISA. The only reason we ever used an American Express was because of Costco.

Although it looks like you don't start earning 2% until you hit $15,000 on the card. This may be a real restriction for some folks. That's pretty high.
https://www.fidelity.com/cash-management/visa-signature-card

Hmmmm - I may be looking for other options.....
 
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Midpack said:
Interesting. I am a Costco member. Might be negotiating gamesmanship, there's still plenty of time to reach an agreement, we'll see - though if they failed to reach agreement in Canada...
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Since American Express themselves today announced the split to be on March 31, 2016, I think the game is over. They had to announce, as it is material to their stock price, and I doubt they would want to suffer their stock dropping if they were still in negotiations.
 
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I use my AMEC card at Costco but it generally has 2% rebate for travel so I also put airline tickets on it. Given they have whole year to work out deals I am not going to be too worried.

I was using the PenFed card everywhere else but once the rewards program got much worse. I switch to a 1% cash back card from BofA. I hate doing business with BofA, so I am open to the opportunity to consolidate on a single card like Visa or Mastercard.
 
At the moment it appears Warren Buffet may lose ~800M on the AXP drop.

Should we take up a collection?
 
kiki said:
The only downside is that AmEx supports automatic downloads of transactions into MoneyDance (or Quicken). That is a nice feature and one that I'm guessing Capital One won't support.
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I automatically download into Quicken from Capital One for one of my cards. Should be OK for all their cards I would assume.
 
Cobra9777 said:
Costco has a cult-like following, so I doubt they will lose much revenue. Personally, I dislike Costco for many reasons and haven't been there in years. This fallout with AMEX just adds to the list of reasons to avoid them.
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Cobra, Is that your blog? Cute.
I guess we don't have the cult following that you have in Texas and our stores aren't mobbed. No problem finding a parking space (then again I park as far out as I can), no line to get in to store, hardly a line to check out or get out of store. I have had to stand in line to buy a frozen yogurt or hot dog.
I just got a Costco AMEX card this past November. Only reason I got the card is because they excepted no other card and if you want to order online you're out of luck. Does anyone know why they only except one card? Is it cheaper for them?
 
splitwdw said:
Cobra, Is that your blog? Cute.
I guess we don't have the cult following that you have in Texas and our stores aren't mobbed. No problem finding a parking space (then again I park as far out as I can), no line to get in to store, hardly a line to check out or get out of store. I have had to stand in line to buy a frozen yogurt or hot dog.
I just got a Costco AMEX card this past November. Only reason I got the card is because they excepted no other card and if you want to order online you're out of luck. Does anyone know why they only except one card? Is it cheaper for them?
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They accept any AMEX card - not just their own. I'm sure they got some kind of sweet deal to allow them not to accept MasterCard or VISA for so long.
 
audreyh1 said:
They accept any AMEX card - not just their own. I'm sure they got some kind of sweet deal to allow them not to accept MasterCard or VISA for so long.
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For a long time they accepted no credit cards. Then they accepted the Costco Amex, then ALL Amex cards. It's possible that when they started taking all Amex cards they got a financial incentive to not take any other cards, I suppose.
 
Interesting. I passed an AMEX sign-up table at Costco just last week.
 
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