The best credit cards for shopping at Costco of May 2024

Costco shoppers are dedicated to the retailer's bulk discounts and rotisserie chicken, but you need to make sure you have the right credit card before you shop there. Since 2016, Visa has been the exclusive credit card of Costco.

That means you won't be able to pay in-store with a credit card backed by American Express, Mastercard or Discover. However, you can use a Mastercard or Discover card at Costco.com and via the Costco app. If you prefer to shop in-store at Costco with a credit card, then make sure you have a Visa-backed credit card.

Here are CNBC Select's picks for the top credit cards for shopping at Costco.

Who's this for? The Wells Fargo Active Cash® Card is a solid cash-back card where you earn 2% cash rewards on all eligible purchases, as well as the opportunity to earn a $200 cash rewards welcome bonus after spending $500 in the first three months of account opening.

In addition, you will have a 0% intro APR for 15 months from account opening on purchases and qualifying balance transfers (after, 20.24%, 25.24%, or 29.99% variable APR; balance transfers made within 120 days qualify for the intro rate and fee of 3% then a BT fee of up to 5%, min: $5). This is a great feature to use on large Costco purchases as it gives you an extended period to pay it off without incurring any interest.

Lastly, the card also comes with cell phone protection for up to $600 (subject to a $25 deductible) in case your phone is stolen or damaged. The card has no annual fee.

Who's this for? Perhaps the most obvious choice is the Costco Anywhere Visa® Card by Citi. There is no annual fee, and the Costco membership requirement shouldn't be an issue since you need a membership to shop at the warehouse (unless you share with a family member or friend).

Cardholders earn 4% cash back on eligible gas and EV charging purchases for the first $7,000 per year (then 1%); 3% cash back on restaurants and eligible travel purchases; 2% cash back on all eligible purchases from Costco and Costco.com; and 1% cash back on all other purchases.

One quirk about this card: You earn an annual reward certificate once a year, and it's only redeemable at a U.S. Costco Warehouse. You can redeem the certificate for purchases at Costco, a Costco Shop Card (which can be used for purchases at Costco.com) or a cash (at Costco's discretion). Learn more about how to redeem Costco credit card rewards.

Added perks include no foreign transaction fees, travel and emergency assistance, worldwide travel accident insurance and worldwide car rental insurance.

Want even more info? Here are 5 key things to know about the Costco Anywhere Visa Card.

Who's this for? The Chase Freedom Unlimited® has no annual fee and a simple cash-back program. Cardholders can take advantage a generous welcome bonus: earn an additional 1.5% cash back on everything you buy (on up to $20,000 spent in the first year) - worth up to $300 cash back! Earn 6.5% cash back on travel purchased through Chase Travel, 4.5% cash back on drugstore purchases and dining at restaurants (including takeout and eligible delivery service), and 3% on all other purchases (on up to $20,000 spent in the first year). After your first year or $20,000 spent, enjoy 5% cash back on travel purchased through Chase Travel, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and unlimited 1.5% cash back on all other purchases. If you don't want to deal with rotating bonus categories or activation, this card can be a simple way to earn cash back.

Who's this for? The Chase Sapphire Preferred is one of the best travel credit cards available and pairs well with the other two Chase credit cards mentioned earlier. Chase Sapphire Preferred cardholders earn 5x on travel purchased through Chase Travel℠, 3x on dining, select streaming services and online groceries, 2x on all other travel purchases, and 1x on all other purchases.

This card is notable for the strong redemption rate when you redeem points for travel via Chase Travel℠. Points are worth 25% more, so the 60,000-point welcome bonus is worth up to $750 toward travel booked through Chase Travel℠ (you need to spend $4,000 within the first three months to earn the bonus). This is a great way to maximize the value of points and the welcome bonus.

Beyond rewards, cardholders can benefit from helpful travel perks, such as a $50 Annual Chase Travel Hotel Credit, no foreign transaction fees, trip cancellation/interruption insurance, auto rental collision damage waiver, travel and emergency assistance services, baggage delay insurance and trip delay reimbursement.

Who's this for? The PenFed Power Cash Rewards Visa Signature® Card can earn you 2% cash back on every purchase, if you're a PenFed Honors Advantage member (which requires a qualifying checking account or military affiliation). Otherwise, you earn 1.5% cash back on all purchases.

PenFed is a credit union, so membership is required to open a card. Anyone can join by applying, opening a savings account with a $5 deposit and maintaining a $5 account balance.

To earn the higher cash-back rate, you need to become an Honors Advantage member in one of several ways: be in an active military service status, a member of the Reserves or National Guard, an honorably discharged U.S. military veteran or retired from such service; be the primary owner on both the credit card and checking accounts of any existing open PenFed product (excluding PenCheck Limited accounts); or open a new Access America checking account (which requires a daily balance or monthly direct deposit of $500 or more to waive the $10 monthly service fee).

Before you apply for a credit card, you should always ask yourself a few questions that can help shape which credit card is best for your needs.

• What's my credit score? Knowing your credit score is key to gauging which credit cards you have the best chances of qualifying for. There are numerous free credit score resources available that provide your credit score, updated on a monthly basis.
• Why do I want to open a credit card? You should only open credit card when there's a need. So if you shop at Costco and pay with cash because you don't have a credit card backed by Visa, then that's a good reason since you're missing out on rewards.
• Is an annual fee worth it? If you're looking at a credit card with an annual fee, do the math to see if the benefits outweigh the fee.
• How do I plan to use the card? You've already decided that you want a card for Costco, but now you should see what other purchases you expect to charge to the card. If you want it for everyday use, consider a flat-rate cash-back card, like the Chase Freedom Unlimited®. But if you plan on traveling outside the U.S., check out credit cards with no foreign transaction fees, such as the Chase Sapphire Preferred®.

Credit cards provide numerous perks beyond the ability to buy now and pay later. You may earn bonus rewards in select categories, benefit from annual statement credits, receive a 0% intro APR period and many other benefits. Review what credit card benefits are offered by your card, then take full advantage of them.

So if you plan on traveling abroad, cards like the Costco Anywhere Visa® Card, PenFed Power Cash Rewards Visa Signature® Card and Chase Sapphire Preferred® are the best options since they have no foreign transaction fees.

To determine which cards offer the best value for Costco shoppers, Select analyzed 234 of the most popular credit cards available in the U.S. We compared each card on a range of features, including rewards, welcome bonus, introductory and standard APR, balance transfer fee and foreign transaction fees, as well as factors such as required credit and customer reviews when available. We also considered additional perks, the application process and how easy it is for the consumer to redeem points.

We also estimated how much the average consumer would save over the course of a year, two years and five years, assuming they would attempt to maximize their rewards potential by earning all welcome bonuses offered and using the card for all applicable purchases. All rewards total estimations are net the annual fee. Our final picks are weighted heavily toward the highest five-year returns, since it's generally wise to hold onto a credit card for years. This method also avoids giving an unfair advantage to cards with large welcome bonuses.

Select teamed up with location intelligence firm Esri. The company's data development team provided the most up-to-date and comprehensive consumer spending data based on the 2019 Consumer Expenditure Surveys from the Bureau of Labor Statistics. You can read more about their methodology here.

Esri's data team created a sample annual budget of approximately $22,126 in retail spending. The budget includes six main categories: groceries ($5,174), gas ($2,218), dining out ($3,675), travel ($2,244), utilities ($4,862) and general purchases ($3,953). General purchases include items such as housekeeping supplies, clothing, personal care products, prescription drugs and vitamins, and other vehicle expenses.

Select used this budget to estimate how much the average consumer would save over the course of a year, two years and five years, assuming they would attempt to maximize their rewards potential by earning all welcome bonuses offered and using the card for all applicable purchases. All rewards total estimations are net the annual fee.

It's important to note the value of a point or mile varies from card to card and based on how you redeem them. When we calculated the estimated returns, we assumed that cardholders are redeeming points/miles for a typical maximum value of 1 cent per point or mile. (Extreme optimizers might be able to achieve more value.)