Wholesale clubs have become increasingly popular with price-sensitive consumers over the past several years. On average, you can expect to save anywhere from 5-30% when compared to national retailers like Target and Walmart according to CheckBook.org.
According to estimates from financial intelligence firm CFRA, U.S. wholesale clubs have grown at an impressive compound annual growth rate of 6% since 2007. Not surprisingly, cash back credit cards that offer cash back on purchases at wholesale clubs have grown in popularity as well. These include cards that are co-branded with a particular wholesale club, such as the card_name, and cards that allow you to earn rewards at the warehouse club of your choice. Citi is a CardRatings advertiser.
These type of cards can certainly help stretch your hard-earned dollars and can even allow you to earn rebates on gas purchases at wholesale clubs which already have a reputation of offering steeply discounted gas prices. However, there seems to be a lot of confusion among cardholders as to what is the best credit card for a given wholesale club.
It is my hope that this article will help you decide which card(s) is best suited for you if you’re a member of a wholesale club. And, if you’re not a member, I hope you will be inspired to consider joining one and/or applying for a card that offers enhanced rewards once you see how much you can earn and save in a given year.
What are the benefits of co-branded wholesale club credit cards?
Before you can determine the best card for you, it’s a good idea to get familiar with the benefits of co-branded cards. There’s an option for each of the three major wholesale clubs: BJ’s, Costco, and Sam’s Club. Each offers their own unique benefits and rewards.
The card_name, for example, offers:
- 4% cash back on eligible gas and EV charging purchases for the first $7,000 per year and then 1% thereafter
- 3% cash back on restaurants and eligible travel purchases
- 2% cash back on all other purchases from Costco and Costco.com
- 1% cash back on all other purchases
There is no annual fee with your paid Costco membership. Rewards are received as an annual credit card reward certificate, which is redeemable for cash or merchandise at Costco.
The Sam’s Club credit card, the Sam’s Club Mastercard, offers:
- 5% back in Sam’s Cash on gas anywhere Mastercard is accepted (on the first $6,000 per year, then 1%)
- 3% back in Sam’s Cash on Sam’s Club purchases for Plus members; Club members earn 1% cash back
- 3% back in Sam’s Cash on dining and takeout
- 1% back in Sam’s Cash on other purchases
The Sam’s Club Mastercard also features no annual fee and doubles as your membership card. Sam’s Cash earned is automatically loaded to your Sam’s Club membership and does not expire. It can be used for in-club purchases, Scan & Go checkout, curbside pickup, online at SamsClub.com, or redeemed for cash at the club.
Finally, there are two BJ’s credit cards. The BJ’s One Mastercard includes The Club membership, plus features 3% back in rewards on most purchases at BJ’s, 1.5% back in rewards on purchases everywhere else Mastercard is accepted, and $.10 off/gallon at BJ’s Gas. There is no annual credit card fee, and rewards can be redeemed in-club, at BJs.com, or in the BJ’s app.
The BJ’s One+ Mastercard includes The Club+ membership and features 5% back in rewards on most purchases at BJ’s, 2% back in rewards on purchases everywhere else Mastercard is accepted, $.15 off/gallon at BJ’s Gas, and also has no annual fee. The rewards can also be redeemed in-club, at BJ’s.com, or in the BJ’s app. Only BJ’s Wholesale Club members can apply for either card.
As you can see, the rebate percentages offered by these co-branded cards are quite strong, especially when compared to cards that only offer you 1% back on wholesale club purchases. These co-branded cards are hard to beat if you shop a lot at wholesale clubs.
Information related to Sam’s Club and BJ’s cards has been collected independently by CardRatings and was neither reviewed nor provided by the card issuers.
➤ SEE MORE:Which credit cards earn cash back at Walmart and Target?
Are co-branded cards the best credit cards for wholesale clubs?
While co-branded cards are certainly compelling for many consumers, there are other options that are worth considering. For example, a credit card that offers 2% on all purchases, and not just in eligible categories, could be an easy way for consumers to earn on all of their spending. These cards may allow you to earn the most cash back at warehouse clubs, particularly in these three scenarios:
- You prefer having just one rewards credit card in your wallet
- You don’t shop a lot at wholesale clubs or prefer not to be limited to shopping at just one wholesale club
- You don’t normally buy your gas from wholesale clubs
If one of these scenarios applies to you, you will likely be better off using a flat rate card such as the card_name. This is especially true if two or three of these scenarios apply. However, you should always do the math to make sure.
Credit card expert Jason Steele gives a great illustration:
“In most cases, earning a flat rate of 2% is going to be better. For example, the Costco anywhere Visa card by Citibank offers 2% cash back at Costco, but only 1% cash back on all other purchases. Even though the 4% cash back on eligible gas purchases and electric vehicle charging is very competitive, you might not offset the difference [in rebates] if the Costco card is the only card that you use for all your other purchases.” Information considered accurate at the time of publishing. Offer details are subject to change.
How to earn 5% cash back at wholesale clubs without a co-branded card
There are some rotating cash-back category cards which offer up to 5% cash back on bonus categories that rotate quarterly. Examples include Chase Freedom Flex and the Discover it Card. Such cards have occasionally included wholesale clubs as a rotating 5% cash-back category in the past.
If you have such a card or have seen them advertised, you might be wondering if this the best way to maximize your rewards since 5% is a very aggressive rewards rate. Yet despite the high rebate percentage, these rotating cards are generally not the best fit for most consumers. Steele opines that they can be a good way to maximize your rewards if you are able to plan ahead and make purchases during one of the quarters that feature wholesale clubs. However, he cautions that “you’ll only likely see warehouse stores featured during one quarter each year, and there’s no way to know when they’ll be featured again, if at all.”
One exception to this general rule of thumb is if you’re open to having multiple reward cards– a strategy that some cardholders use to boost their annual rebates. While this strategy certainly isn’t for everyone, if you plan ahead (most issuers have a calendar showing bonus categories), you could certainly leverage these offers to your financial advantage.
BONUS TIP!
The card_name offers a unique rewards structure that allows cardholders to earn 3% cash back in a category of their choice and 2% back at wholesale clubs (up to $2,500 in combined choice category/grocery store/wholesale club quarterly purchases). What’s more, you can change your choice category every month.
Lynnette Khalfani-Cox, author of the New York Times bestseller “Zero Debt: The Ultimate Guide to Financial Freedom,” and affectionately known as the Money Coach, adds that with this card “you can easily adapt to shifts in your lifestyle and routine so that no matter what you’re prioritizing in a given month, you can still maximize rewards earnings — all without needing to change cards.”
Final thoughts
Shopping at wholesale clubs can be a lot of fun, especially when you are saving money and don’t mind buying some things in bulk. Moreover, using rewards credit cards while shopping is a clever way to double-dip that allows you to save up to 5% above and beyond the everyday low prices wholesale clubs often feature.
Certainly, there are a few stumbling blocks. For instance, you may have heard that Costco only accepts Visa credit cards. However, there are normally workarounds to any challenge if you’re a little creative.
In this particular example, Steele explains that there are two ways to use your Mastercard or Discover to make Costco purchases. The first is to make purchases online or through the Costco app. The other way is to purchase a Costco gift card through a third party.
I hope you can join me in my quest to lower my monthly bills. The next time you’re planning a shopping trip to a wholesale club, be sure to arm yourself with the best credit card to make the most of your spending!
