Update: I realized I’ve completely failed to acknowledge the Frequent Miler for all his hard work and for originally sharing this discovery that the Ink Bold card can be used to purchase pre-paid AmEx cards. Although you still have to buy cards in $500 increments, visit his post to learn how to combine these and get more than $500 on any one card.
I’ve been writing about travel discounts at Costco this week, and people keep asking why I’m so gung ho about using my Chase Ink Bold business card to buy pre-paid AmEx gift cards. If you do this at an office supply store, you get 5X Ultimate Rewards points, which I value at 2 cents each (to keep it simple; they’re probably worth more thanks to flexible transfers). That works out to a 10% rebate.
Using a different MasterCard or Visa instead of Ink Bold
Yes, you can use a MasterCard or Visa to make many purchases online, including reservations through Costco Travel, but you can’t use one to buy a lot of these deals that are only available in-store. American Airlines gift cards, for example, are only at certain in-store locations, and stores will only accept Costco Cash Cards, debit cards, and American Express.
Yes, you can use a MasterCard or Visa to buy a Costco Cash Card online and then use that to make your in-store purchase, but then you only get 1X Ultimate Rewards points. You need to make your purchase at an office supply store to get the 5X bonus.
Getting a Costco Executive membership
Yes, there are other ways to get a discount. The basic Costco membership costs $55, but you can pay $110 for an Executive membership that offers a 2% end-of-year rebate on most purchases. To the best of my knowledge this includes gift cards purchased in stores, but it does not include Costco Travel or purchases of Costco Cash Cards. Just other people’s gift cards.
This 2% rebate is irrespective of the method of payment, so it’s just something you pay extra for as part of your membership, though sometimes it can be worth it as Costco Travel may include a few extras in your vacation package as an Executive member. There is a cap of $750 for your annual rebate, and you would have to buy $2,750 in American Airlines gift cards in order to get a $55 credit and break even on the higher membership fee.
Some people report that if you pay more and don’t make at least $55 they will give you a credit for the difference when you renew. Perhaps, but I’m not going to rely on this.
Using a Costco TrueEarnings American Express card
Yes, Costco has its own credit card through American Express that offers rewards. There is no annual fee for this card (you just have to buy a Costco membership, and without that I’m not sure why you would want this card). However, the rewards are really not that great. You can earn cash back for restaurants or gas, but it’s still only 1% cash back for Costco purchases.
Let’s see… 1% using my TrueEarnings AmEx or 10% using my Ink Bold to buy pre-paid AmEx gift cards? I think that’s an easy question to answer. Even though the pre-paid card comes with a transaction fee, that’s about $5 up front in exchange for getting about $50 worth of Ultimate Rewards points. So, fine, I admit it, it’s really only a 9% rebate using Ink Bold. Still a great deal! 
Conclusion
There are lots of ways to pay for purchases at Costco. A lot of them have some kind of cash back or rewards perspective that can make them seem enticing. However, using an Ink Bold card to buy pre-paid AmEx remains the best option. And yes, you can still get an Executive membership to get an additional 2% back regardless of what payment method you use. Just make sure you’re going to spend about $3K a year to make up the additional $55 on top of the standard membership fee.
If you’re interested in getting an Ink Bold business card (charge card) or Ink Plus business card (credit card) here are some of the current links to earn 50,000 bonus points after spending $5,000 in the first three months.
About Scott Mackenzie
