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Costco and AmEx breakup
Old 02-12-2015, 09:01 AM   #1
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Costco and AmEx breakup

I wonder how this affects the Costco AmEx card.

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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.
Details here Costco to stop accepting American Express cards in U.S. from next April | Reuters
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Old 02-12-2015, 09:05 AM   #2
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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).
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Old 02-12-2015, 09:10 AM   #3
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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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Old 02-12-2015, 09:11 AM   #4
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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?
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Old 02-12-2015, 09:25 AM   #5
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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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Old 02-12-2015, 09:32 AM   #6
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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.
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Old 02-12-2015, 10:06 AM   #7
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Originally Posted by athena53 View Post
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.

+1. I wonder how this will affect other Costco - AmEx relationships like Costco's peddling Ameriprise insurance, for example.
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Old 02-12-2015, 10:47 AM   #8
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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
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Old 02-12-2015, 11:23 AM   #9
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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.
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Old 02-12-2015, 12:08 PM   #10
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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
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Old 02-12-2015, 12:10 PM   #11
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... 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.
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.

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Old 02-12-2015, 12:13 PM   #12
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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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File Type: jpg colossus-platinum-card-300x189.jpg (73.1 KB, 494 views)
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Old 02-12-2015, 12:23 PM   #13
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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.
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Old 02-12-2015, 12:48 PM   #14
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Originally Posted by Midpack View Post
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

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.
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Old 02-12-2015, 01:17 PM   #15
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Originally Posted by MichaelB View Post
I wonder how this affects the Costco AmEx card.

Details here Costco to stop accepting American Express cards in U.S. from next April | Reuters
I believe they made a deal with Capital One for Canada.

March 2016 is the last month they will honor AmEx in the US.

So, I expect that over the next year they will be issuing us new cards to replace the Costco AmEx card.
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Old 02-12-2015, 01:20 PM   #16
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Originally Posted by athena53 View Post
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 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-manage...signature-card

Hmmmm - I may be looking for other options.....
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Old 02-12-2015, 01:24 PM   #17
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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...
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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Old 02-12-2015, 02:33 PM   #18
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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.
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Old 02-12-2015, 02:48 PM   #19
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At the moment it appears Warren Buffet may lose ~800M on the AXP drop.

Should we take up a collection?
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Old 02-12-2015, 02:50 PM   #20
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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 automatically download into Quicken from Capital One for one of my cards. Should be OK for all their cards I would assume.
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