Costco’s Credit Card Switch Did Not Affect Profits

Costco’s Credit Card Switch Did Not Affect Profits

October 4, 2016         Written By Bill Hardekopf

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Despite the well-documented struggles associated with Costco’s credit card switch, the transition from American Express to Citi has not seemed to impact the company’s profits. Costco reported higher than expected earnings for their fourth quarter (which ended August 28), posting a 2% increase in profits versus year-ago levels.

Costco faced a number of hurdles during this transition, including delays in the actual transfer time, customer service issues and even potential account compromises. But most users seem to be pleased with their new Costco rewards cards and have continued to shop at the wholesale store.

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“In terms of increased cash back rewards, the estimate is about a 40% to 50% improvement in the reward program,” said Costco’s CFO Richard Galanti.

One of the biggest reasons for Costco’s unexpected success in the fourth quarter is because the company pays a much lower fee to Visa than they did to American Express. The company also has more members now than earlier this year, jumping up from 85.5 million users at the end of the third quarter to 86.7 million users at the end of the fourth quarter.

Outside of the United States, Costco reported a sales growth of 5% in Canada and 1% in the rest of the world.

The information contained within this article was accurate as of October 4, 2016. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.


About Bill Hardekopf

Bill Hardekopf is the CEO of and covers the credit card industry from all perspectives. Bill has been involved with personal finance for over 15 years. He is a frequent contributor to Forbes, The Street and The Christian Science Monitor.
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