Costco Delays Credit Card Switch until Summer
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Costco’s transition from American Express to Citigroup has been pushed back a few months. The deal, which ends the 16-year relationship between Costco and AmEx, was scheduled to go into effect April 1st, but Costco says it may not be until the middle of the summer before Citi takes over the contract.
According to Richard Galanti, the chief financial officer for Costco, the transition period is “fluid.” Galanti said, “It’s between Amex and Citi–negotiating and completing the agreements to do that transition.”
As it stands, Costco is already losing money during the transition period because they are no longer getting a “finder’s fee” from American Express for selling their co-branded credit cards. Estimates in December 2015 figured Costco would lose $15 million until the Citi deal began. With this delay, that loss could be higher.
Overall, Costco will be saving money once the switch takes place. The retailer will have very low fees with Citi and Visa, compared to the 0.6% transaction fee they currently pay with American Express.
Costco is planning to send out new card numbers to rewards cardholders when the transition is complete, since Citi and AmEx have different numbering systems for their cards. The change will not have any impact on the accounts themselves, or how they are represented on credit reports.