The New CIBC Costco Mastercard, Coming March 2022

Earlier this year, CIBC acquired the rights to be the exclusive credit card partner of Costco in Canada.

Today, they’ve announced some details about the new CIBC Costco Mastercard, which will be available on March 4, 2022 as the successor to the Capital One Costco Mastercard.

CIBC Costco Mastercard: Rewards

The CIBC Costco Mastercard will continue to have no annual fee for primary or secondary cardholders. There’s also no signup bonus, so if you get this card, it’s purely for everyday earning and cardholder benefits.

It will also continue to earn cash back rewards. Here are the rates you’ll earn on everyday spending:

  • 3% cash back at restaurants
  • 3% cash back at Costco Gas, and 2% cash back at other gas stations (up to $5,000 spent per calendar year)
  • 2% cash back at Costco.ca, online only (up to $8,000 spent per calendar year)
  • 1% cash back on all other purchases, including in-store at Costco warehouses

These are similar to the old rewards, with some notable improvements. 3% cash back on gas is uniquely high for a no-fee credit card, and for a Mastercard, at least until you hit the annual limit.

I’m glad to see that they’ve raised the base earn rate. Previously, the Capital One card only earned 0.5% cash back on the first $3,000 spent per year – a pitiful insult to loyal Costco shoppers who could actually earn more rewards at Costco by using a different Mastercard.

Now, you’ll earn 1% cash back at Costco right away, or 2% online. It’s a shame the 2% rate isn’t offered at Costco warehouses as well. Luckily, you can still make large purchases online for higher rewards, while benefitting from Costco’s low pricing and generous warranty.

I was curious if the card might earn Aventura points, as flexible travel rewards would have made CIBC’s acquisition more interesting. Nevertheless, I’m not surprised that they opted for a simple approach as they absorb a new swath of clients.

As before, you’ll receive your cash back once a year in January as a Costco gift certificate. This is another missed opportunity by CIBC to bring their new product into the mainstream by making rewards easier to use, but I imagine it won’t be a huge inconvenience for heavy Costco shoppers.

CIBC Costco Mastercard: Features

Travel perks are rather limited, given that the card is marketed more towards the average consumer.

Most notably, the card offers mobile device insurance up to $1,000. As more and more credit cards in Canada provide this type of coverage, it’s still rather rare on a no-fee card. You won’t have to worry about recurring annual fees while you continue to reap the benefits of insurance.

Additionally, the card has extended warranty (double the manufacturer’s warranty up to one additional year), and purchase protection against accidental damage or theft for 90 days – rather standard on most credit cards.

Like with the old Capital One card, members will be able to use the CIBC Costco Mastercard as their Costco membership card. That should help keep your wallet slim as you juggle an extensive roster of credit cards.

Otherwise, the card doesn’t have any interesting benefits. You can enrol in CIBC Pace It, a low-interest payment plan for your purchases which is standard on many CIBC cards, but this isn’t useful if you pay your statement in full every month (as you should).

There will also be a CIBC Costco World Mastercard. Details are scarce so far, but it sounds like the only novel features will be the standard Mastercard benefits at the World tier. Basically, I’m anticipating a Tangerine situation, where the two products are virtually identical, just with an income requirement in exchange for a negligible upgrade.

Making the Transition from Capital One

The CIBC Costco Mastercard will launch on March 4, 2022. New cards will automatically be issued to existing cardholders.

You’ll be able to keep using your Capital One Costco Mastercard until August 31, 2022 (although you should activate your CIBC card as soon as you receive it). Meanwhile, you’ll immediately get CIBC benefits, including mobile insurance and new rewards rates, as of March 4.

CIBC is basically acquiring the Capital One portfolio as-is. Your credit limit and pre-authorized payments will stay the same. I assume this means you’ll keep using your old card number and expiry date, and perhaps the tradeline will transfer as well, ideally preserving the age of your account.

However, if you use pre-authorized debits to auto-pay your Capital One bill from your chequing account, you’ll have to set this up fresh with CIBC. You can make payments to Capital One (both automatic and manual) until March 3, and to CIBC thereafter. Your statement date may change.

If you’re not already a CIBC client, you’ll also get access to CIBC Online & Mobile Banking on March 7. Online access to your Capital One account will end on March 3, so be sure to download any electronic statements for your own records before then.

Existing cardholders can expect to receive direct communication with more information.

For now, CIBC is making sure that Capital One cardholders will have a seamless process as they move to a new credit card issuer. Costco members who aren’t currently cardholders will be able to apply for the CIBC Costco Mastercard a little later in March 2022.

A Big Opportunity for CIBC

Terms of the acquisition have not been disclosed, but it’s surely a gigantic one.

CIBC is buying the entire Costco credit card portfolio from Capital One – not just rights to the brand, but also its customers. That includes over $3 billion in outstanding balances.

While debt represents risk for CIBC in case any of their customers default, it’s an enormous asset on their balance sheet (provided those debts are repaid). And while we certainly don’t recommend carrying a balance, the reality is that many consumers do. From the bank’s perspective, this is a big win.

CIBC is no stranger to the co-branded card game. As one of Aeroplan’s credit card partners in Canada, they recognize the value of a large brand and its audience. Costco is one of the largest and broadest in the country, and its store cardholders represent a huge number of new customers for the bank as they take their experience with co-branded partners and expand into the everyday rewards market.

While CIBC plays a supporting role to American Express and TD in the Aeroplan space, I think there’s room for them to do a bit more. Perhaps we’ll eventually see greater integration with Costco Travel, or a rekindling of the Aeroplan–Costco partnership.

Conclusion

With the upcoming launch of the CIBC Costco Mastercard, CIBC is putting the focus on a smooth transition from Capital One for existing Costco cardholders, with improved cash back and benefits.

I think this partnership has tons of potential for cardholders. Costco members are always hunting for a good deal, and I’m sure there will be a lot of overlap with savvy consumers who know how to get the most out of their credit cards.

Ultimately, with CIBC taking over from Capital One, a bank that is effectively exiting Canada, they have the capacity to offer a lot more. That can only be a win for the consumer, and I’m hopeful that CIBC will be able to add a lot more value for its Costco cardholders than Capital One did.

15 Comments
  1. Loni Pisani

    I called to ask about upgrading from the regular MC to the World Mastercard – and they had no details. I guess I will wait until March to ask again.
    Could anyone explain the difference between regular and world (typically). Thanks 🙂

  2. Neil Ma

    Simplii Visa is $0 fee with 4% cash back on restaurant
    CIBC Visa is $120 fee with 4% cash back on grocery and gas, their insurance package is also much better, plus it has $0 transaction fee for global money transfer. $3,000 to breakeven.

    In contrast, Costco executive membership is $120 plus tax, so $126, I suppose one needs to spend at least $4,200 to break even (2% from executive membership and 1% from Costco membership). This is in comparison to $4,700 break even point with old card. The downside is that CIBC MC has limits to cash backs.

  3. Al

    I showed the Costco supervisors a few times at cash out, that I paid with a different Mastercard where I get 1 %. Using the capitolone card would get me .5 %. Told them that CIBC has an opportunity to correct this and it appears they did. So this no fee CIBC card will be appealing to Costco customers. They kept the 3 % restaurant cash back which is very appealing for a no fee card. Kudos to CIBC

  4. Deal Seeker

    I guess we’re losing the price protection feature on the old Capital One card then. Underrated perk and one of the last cards to offer it.

    1. Vlad

      Credit card price protection is too much hassle. So much easier & often better price if you price match at a store.

  5. Bhanu Verma

    I see you struck 1% and put 3% for restaurants. But, it was always 3% for restaurant purchases. Also, the only value addition offered by CIBC after such a large acquisition seems Mobile device insurance. I think Brim still beats this in terms of value.

  6. Annie

    As the credit card is also Costco membership card, would the card comes with (at least) $60 Gold Star Membership – or even better, $120 Executive Gold Star Membership? If so, that would be a sweet $0 Annual Fee card 🙂

    1. Josh YVR

      No, the credit card can replace the membership card, not the membership itself. You’ll still need to buy a Costco membership to be eligible for the CIBC Costco Mastercard.

      1. Gary

        Anyone who spends more than $6000 at Costco gets the $120 paid for anyhow. You get 2% back on every purchase you make anyhow.

        Can you buy Costco cash cards on Costco.ca and get 2% on your CIBC and then you’d be getting 2% on all purchases for having an executive card?

  7. Jeff

    Josh, would buying Costco gift cards (“Cash cards”) online qualify for 2% cash back?

  8. Aziz kanji

    costco should have come back again with Amex..

  9. Al

    Yea I miss the Amex Costco connection. Those were wonderful times!

  10. John

    The big thing no one is taking about and I find interesting is cibc doesn’t have any master card Credit cards in there portfolio, only visa that I know of. Wonder if this will create more master card space other then just the Costco master cards that come of it.

  11. travelingfish

    Let’s hope for some Costco & Aeroplan cross-brand promotions!

  12. Eu-Rway Chew YYJ

    I was hoping for Amex. 🙁

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