Gift cards have become an increasingly popular payment method among consumers in recent years. According to a 2021 survey by the National Retail Federation, nearly 50% of shoppers planned to purchase at least one gift card during the holiday season, with an average spend of $47 per card.
But while gift cards can offer a convenient way to give and receive gifts, they can also be a bit confusing to use – especially when it comes to Costco. The wholesale giant has specific policies around which types of gift cards it accepts, and these policies aren‘t always well-understood by shoppers.
In this comprehensive guide, we‘ll break down everything you need to know about using gift cards at Costco, from the types of cards accepted to expert tips for getting the most value out of your gift card purchases.
Costco‘s Gift Card Policies: The Basics
Let‘s start with the most important question: What types of gift cards does Costco actually accept? The answer depends on whether you‘re shopping in-store or online.
In-Store Purchases
At Costco warehouses in the U.S., you can pay for your purchases with the following types of cards:
- Visa credit cards and gift cards
- Most PIN-based debit/ATM cards
- Costco Shop Cards (Costco‘s own gift cards)
Notably absent from this list are Mastercard, American Express, and Discover cards. Costco has an exclusive partnership with Visa, which means it only accepts Visa credit cards – not competing networks like Mastercard or Amex.
This policy has been in place since June 2016, when Costco ended its long-standing partnership with American Express and switched to Visa as its exclusive credit card partner. Under the new agreement, Citi became the issuer of Costco‘s co-branded credit card, while Visa became the only major credit card network accepted at Costco stores.
Online Purchases
For purchases made on Costco.com, the accepted payment methods are slightly different:
- Visa credit cards and gift cards
- Mastercard credit cards and gift cards
- Discover credit cards and gift cards (including JCB and Diners Club)
- Most PIN-based debit/ATM cards
- Costco Shop Cards
As you can see, Costco.com accepts a wider range of gift cards than Costco‘s physical stores, including Mastercard and Discover gift cards. However, American Express gift cards are still not accepted for online purchases.
How Costco‘s Policies Compare to Other Retailers
To put Costco‘s gift card policies in context, let‘s take a look at how they compare to some of the company‘s biggest competitors:
| Retailer | Visa Gift Cards | Mastercard Gift Cards | Amex Gift Cards | Store Gift Cards |
|---|---|---|---|---|
| Costco (in-store) | Yes | No | No | Yes |
| Costco.com | Yes | Yes | No | Yes |
| Walmart | Yes | Yes | Yes | Yes |
| Target | Yes | Yes | Yes | Yes |
| Amazon | Yes | Yes | Yes | Yes |
| Sam‘s Club | Yes | No | No | Yes |
As you can see, Costco is somewhat unique in its approach to gift cards. While most other major retailers accept all major credit card networks (Visa, Mastercard, Amex, Discover), Costco only accepts Visa cards in-store and adds Mastercard and Discover for online purchases.
This policy is largely a result of Costco‘s business model, which relies on exclusive partnerships and bulk purchasing to keep prices low for members. By limiting the types of cards it accepts, Costco is able to negotiate lower interchange fees with Visa and streamline its payment processing.
Tips for Using Gift Cards at Costco
Now that we‘ve covered the basics of Costco‘s gift card policies, let‘s dive into some expert tips for using gift cards to maximize your savings and minimize potential headaches.
1. Check your gift card balance before shopping
One of the most common issues shoppers encounter when using gift cards is not having enough funds to cover the full purchase amount. To avoid this problem, always check your gift card balance before heading to Costco (or any other retailer).
Most Visa and Mastercard gift cards have a website where you can easily check your balance online. Simply enter the card number and security code, and the website will display your current balance. Alternatively, you may be able to check your balance by calling the customer service number on the back of the card.
2. Use gift cards in combination with other payment methods
If you have a gift card that doesn‘t quite cover the full amount of your Costco purchase, don‘t worry – you can usually use multiple forms of payment. Simply ask the cashier to apply the gift card balance first, then use another payment method (like a debit or credit card) to cover the remaining amount.
This can be a great way to use up small balances on gift cards that might otherwise go to waste. Just be sure to let the cashier know you want to use multiple payment methods before they start ringing up your purchase.
3. Be aware of potential fees and expiration dates
While gift cards can be a convenient payment option, they also come with some potential drawbacks – namely, fees and expiration dates.
Many Visa and Mastercard gift cards charge activation fees (usually around $5) when you first purchase them. Some cards may also charge monthly inactivity fees if you don‘t use them for an extended period (usually 12 months or more).
In addition, most gift cards have expiration dates printed on the front or back of the card. If you don‘t use the full balance before the expiration date, you may lose any remaining funds.
To avoid these issues, it‘s a good idea to use your gift cards promptly after receiving them. If you have a gift card that you don‘t think you‘ll use right away, consider re-gifting it to someone else who might be able to use it before the expiration date.
4. Keep your gift cards secure
Like any form of payment, gift cards can be lost, stolen, or compromised by fraud. To protect yourself, treat your gift cards like cash and keep them in a safe place (like a wallet or purse) when not in use.
If you lose a gift card or suspect that it may have been stolen, contact the card issuer immediately. Some cards offer purchase protection or other security features that can help you recover lost funds or dispute fraudulent charges.
Real-World Examples and Consumer Stories
To illustrate how consumers are using gift cards at Costco (and beyond), here are a few real-world examples and stories:
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Sarah, a busy mom of three, often receives Visa gift cards as holiday gifts from friends and family. She uses these cards to stock up on household essentials at Costco, like paper towels, laundry detergent, and snacks for her kids‘ lunches. By combining gift cards with her Costco Anywhere Visa Card, Sarah is able to earn 2% cash back on her Costco purchases while stretching her gift card dollars further.
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John, a college student on a tight budget, saved up several Costco Shop Cards he received as graduation gifts. He uses these cards to purchase bulk items like rice, pasta, and frozen vegetables, which help him save money on groceries throughout the semester. He also takes advantage of Costco‘s low gas prices by using his Shop Card to fill up his car at Costco gas stations.
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Rachel, a small business owner, often purchases Costco Shop Cards to give as employee incentives and customer thank-you gifts. She appreciates that the cards can be used for a wide variety of products and services, from groceries to electronics to travel packages. And because Costco Shop Cards never expire and have no fees, Rachel knows that her recipients will be able to use them whenever and however they choose.
The Future of Gift Cards: Industry Predictions and Trends
As digital payments continue to evolve, many experts predict that traditional plastic gift cards may eventually be phased out in favor of mobile and electronic alternatives. Some retailers (including Costco) now offer digital gift cards that can be delivered via email and stored on a smartphone or mobile wallet.
According to a report by Allied Market Research, the global digital gift card market is expected to reach $698 billion by 2024, growing at a compound annual rate of 14.2% from 2016 to 2024. This growth is being driven by factors like increasing smartphone adoption, growing e-commerce sales, and the convenience and flexibility of digital gift cards.
However, this doesn‘t necessarily mean that physical gift cards are going away anytime soon. Many consumers still prefer the tangible experience of giving and receiving a physical card, and some gift-givers worry that digital cards may feel impersonal or be overlooked in a crowded email inbox.
Ultimately, the future of gift cards will likely involve a mix of physical and digital options, with retailers striving to offer a range of choices to suit individual consumer preferences. As long as gift cards remain popular among shoppers, retailers like Costco will need to continue adapting their policies and technologies to keep up with changing trends and demands.
Conclusion
In summary, Costco accepts Visa gift cards as payment both in-store and online, while Mastercard and Discover gift cards are only accepted for online purchases. Costco does not accept American Express gift cards, nor does it accept Mastercard gift cards in its physical stores.
If you‘re planning to use a gift card at Costco, be sure to check the balance beforehand and keep the card secure to avoid potential issues. You can also use gift cards in combination with other forms of payment, like cash or a personal credit card, to maximize your purchasing power.
While Costco‘s gift card policies may be more restrictive than some other retailers, they are designed to align with the company‘s overall business model and keep prices low for members. By understanding these policies and using gift cards strategically, savvy shoppers can still find plenty of ways to save money and get great value out of their Costco purchases.
As the retail landscape continues to evolve, it will be interesting to see how gift cards – both physical and digital – adapt to meet the changing needs and preferences of consumers. But one thing seems certain: gift cards will remain a popular and convenient payment option for the foreseeable future, at Costco and beyond.
