Changes to Citibank Costco CardThe Costco credit card portfolio is one of the largest co-brands in the country. Citibank took over the portfolio way back in 2015, from long-time co-brand partner American Express. Costco’s credit card is a unique product, coming from one of the country’s largest retailers and bringing with it a payment network win: Costco only accepts credit cards issued on the network of its proprietary cards.
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Starting last week, the Costco Anywhere Visa Card by Citi will earn 5% cashback on gas purchases made at Costco, which operates its own gas stations. Gas purchases at other gas stations will earn 4% (no change). EV charging now also earns 4% cashback bringing another growing spending category into play. Accelerated rewards on all gas and EV,-charging, Costco and not, are capped at $7,000 in spend per year, after which it drops to 1%. The card’s other rewards remain the same: 3% back at restaurants and travel (which, in this case, excludes timeshares, campgrounds, bed and breakfasts, and train travel), 2% at Costco, and 1% everywhere else. The card carries no annual fee, although you must be a Costco member, which does, of course, carry an annual fee. Oh, and they also redesigned it:  Kirk Land Frankly, I am very surprised by this design, which does not include the Costco logo! This card looks like a generic Citibank card with all the new swirly bits they’ve been using lately. Disappointing. I wonder if consumers don’t want “Costco” on their credit cards because the name of the game in most co-brands is “How big can I make this logo and it still fits on the card?” One big downside of the Costco card is that your rewards are issued to you once, annually, in the form of a certificate that you can use at Costco. This mirrors Costco’s membership rewards program, which offers 1 or 2% cashback depending on your membership level on all your Costco spend, to be redeemed via a certificate in-store. It’s like a check they send you. Also disappointing, because maybe you want to shop online? You know, with the Internet.  Talk about evolution... While I am a fan of Costco, I am not a fan of this card. I live too far away from Costco to buy gas there, and I can earn far more using other cards that offer cashback rewards at warehouse stores. My Bank of America Customized Cash Rewards Card earns 2% cashback at all warehouse stores (or more, if you have BofA’s Preferred Rewards, up to 3.5% cashback). Plus, I can auto-redeem my rewards as cash to my checking account. Ally Leaves Its Card BehindAlly Financial, the spin-off of General Motors’ finance arm renamed in 2010, went big into credit cards in December 2021, acquiring Fair Square Financial for $750MM.¹ At the time, Fair Square had 693,000 cardholders with $816 million in loan balances. Some of you may recall Fair Square as the Ollo Card. Last week, Ally announced it is selling its card portfolio to CardWorks, a leading issuer and card servicer known for its Merrick Bank branded cards. The portfolio has grown substantially under Ally’s leadership, almost doubling cardholders to 1.3 million activations and loan balances of $2.3 billion. That growth wasn’t enough for Ally, which has new leadership as compared to 2021. Ally CEO Michael Rhodes said, “Ally's decision to sell its credit card business is part of our broader strategy to pursue a more focused approach, enabling us to simplify and streamline our structure, prioritize our core businesses, and drive improved returns.” Credit cards are hard, and we’ve seen Ally retrench in a few ways over the past year. Industry analysts at the Nilson Report listed Merrick as holding $4 billion in receivables at the end of 2023.² The addition of the Ally portfolio will grow the portfolio by approximately 50%, landing Merrick in the top 20 issuers in the U.S. for 2025 by my estimate. Peyton Pushes PlasticU.S. Bank is investing heavily in its new Smartly Visa Signature card, which provides enhanced rewards for U.S. Bank account holders, based on their total relationship volume with the bank: they hired Peyton Manning as a spokesperson.
Cashback on a pair of binoculars? I could get a new hat! Peyton is everywhere: he has been a spokesperson for Nationwide Insurance, Gatorade, Papa John’s Pizza, Buick, Bud Light, and DirectTV. He has also been a spokesperson for Mastercard, but that must be over now! U.S. Bank’s product is a Visa. Who can forget these classics?
Let's go credit cards, let's go!
I wonder how many priceless pep talks Peyton had to do after this ad... Me, ElsewhereI joined Mary Wisniewski from Cornerstone Advisors on her podcast, Money Isn’t Everything, to discuss our shared experiences in Los Angeles, given the fires this month. We did manage to dicuss credit cards, though. Don’t worry. CardsFTWCardsFTW, released weekly on Wednesdays, offers insights and analysis on new credit and debit card industry products for consumers and providers. CardsFTW is authored and published by Matthew Goldman and the team at Totavi, a boutique consulting firm specializing in fintech product management & marketing. We bring real operational experience that varies from the earliest days of a startup to high-growth phases and public company leadership. Visit www.totavi.com to learn more. Interested in reaching our audience? You can sponsor CardsFTW. *Indicates a company with which Totavi has a financial relationship. - (2021, December 2). Ally Financial (ALLY) Closes Agreement to Acquire Fair Square. Yahoo! Finance. https://finance.yahoo.com/news/ally-financial-ally-closes-agreement-145002695.html?guccounter=1
- (2024). Largest Credit Card Portfolios Worldwide. Nilson Report, (1273). https://nilsonreport.com/newsletters/1273/
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