Why This Chase Credit Card Is the Best for Costco Purchases

When I’m not traveling, I try to make nearly every meal at home, and most of my grocery shopping happens at Costco. Even though bulk buying isn’t for everyone, I purchase enough household items, high-quality meats, and fresh produce to last for weeks.

While many rewards cards offer bonus points or miles for grocery store spending, Costco often doesn’t qualify. Also, Costco only accepts Visa debit or credit cards, so your payment choices are even more limited.

My trips to Costco certainly add up over the year, and although employees have nudged me to get the Costco Anywhere Visa^® Card by Citi, I prefer using another reliable card to come out far ahead. Let’s dive into my strategy for getting the most out of my Costco runs.

Using the Chase Freedom Unlimited^® Card at Costco

Since Costco is a wholesale club, transactions generally don’t qualify as grocery purchases on rewards credit cards.

Let’s take, for example, the American Express^® Gold Card, which is often hailed as the top card for grocery spending. It offers 4x points at U.S. supermarkets (up to $25,000 annually, then 1x). However, it only gives you 1x point for purchases at wholesale clubs or major superstores like Target or Walmart. Since Costco doesn’t accept Amex, I only use the Amex Gold card for grocery runs at stores like Trader Joe’s or Whole Foods.

That’s why the Freedom Unlimited card, a Visa credit card, is a staple in my wallet. And, new applicants can earn $250 cash back after spending $500 within the first 3 months of opening an account — a higher welcome bonus than the previous offer.

LIMITED-TIME OFFER

Chase Freedom Unlimited^®

U.P. Rating 

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This all-purpose cash-back card offers great bonus categories, including bonus points for every purchase you make!

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Chase Freedom Unlimited^®

This all-purpose cash-back card offers great bonus categories, including bonus points for every purchase you make!

Welcome Offer

Earn a $250 Bonus after you spend $500 on purchases in your first 3 months from account opening.

$250

Annual Fee

$0

APR

0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 18.99% - 28.49%.

Credit Recommended

Upgraded Points credit ranges are a variation of FICO^®Score 8, one of many types of credit scores lenders may use when considering your credit cardapplication.

Good to Excellent

Why We Like This Card

The Chase Freedom Unlimited^® is easily one of the best cash-back credit cards on the market. There aren’t many no-annual-fee credit cards that offer multiple great bonus categories like 5% back on travel purchased through Chase, 3% back on dining and drugstore purchases, and 1.5% back on all other purchases.

When paired with other Chase cards in the Ultimate Rewards family, you can transfer that cash back into points if you wish – making it one of the most lucrative cards in your wallet.

Pros & Cons

Pros

• 5% back on travel purchased through Chase Travel℠
• 3% back on dining and drugstore purchases
• 1.5% back on all other purchases

Cons

• 3% foreign transaction fee

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Card Highlights

• Limited Time Intro Offer: Earn a $250 Bonus after you spend $500 on purchases in your first 3 months from account opening
• Enjoy 5% cash back on travel purchased through Chase Travel^SM, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more; 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and 1.5% on all other purchases.
• No minimum to redeem for cash back. You can choose to receive a statement credit or direct deposit into most U.S. checking and savings accounts. Cash Back rewards do not expire as long as your account is open!
• Enjoy 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 18.99% – 28.49%.
• No annual fee – You won’t have to pay an annual fee for all the great features that come with your Freedom Unlimited^® card
• Keep tabs on your credit health, Chase Credit Journey helps you monitor your credit with free access to your latest score, alerts, and more.
• Member FDIC

Financial Snapshot

• APR: 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 18.99% - 28.49%.
• Foreign Transaction Fees: 3% of each transaction in U.S. dollars

Rewards Center

Chase Ultimate Rewards

It’s a superb cash-back card with a $0 annual fee, making it an affordable choice for anyone who prefers not to pay an annual fee. Here’s a look at the rewards rate:

• 5% cash-back on travel booked through the Chase Travel portal
• 3% cash-back on dining and drugstore purchases
• 1.5% cash-back on all other eligible purchases

Turn Cash-Back Rewards Into Chase Ultimate Rewards Points

Why would I settle for 1.5% cash-back when the Costco Anywhere card offers so much more? This store credit card gives 2% cash back on most Costco purchases, with even higher rates on Costco gas and Costco Travel purchases — rates that surpass what the Freedom Unlimited card offers.

However, I’m not a huge fan of how the cash-back rewards are doled out to those with the Costco Anywhere card. My mom has used the Costco Anywhere card for over 2 decades, and she receives her cash-back rewards once per year on her February billing statement.

I like to have more frequent access to my points and use them for travel expenses. If you also have the Chase Sapphire Reserve^®, Chase Sapphire Preferred^® Card, or the Ink Business Unlimited^® Credit Card, you can convert the cash-back rewards earned on the Freedom Unlimited card into Ultimate Rewards points.

Last year, I earned $200 cash-back (or 20,000 Chase points) from Costco purchases with the Freedom Unlimited card. These points are valued at around $400 for travel, and I can redeem them anytime — unlike the Costco Anywhere card, which only lets you redeem rewards once a year.

Book Travel With Chase Ultimate Rewards Points

Chase lets you transfer Ultimate Rewards points at a 1:1 ratio to major airline and hotel loyalty programs like Air France-KLM Flying Blue, United MileagePlus, and World of Hyatt. I’ve redeemed my Chase Ultimate points for everything from domestic flights to long-haul business class tickets and stays at airport hotels and luxury beachfront resorts.

While redemption values vary considerably, achieving more than our 2-cent valuation of Chase Ultimate Rewards points is not hard. With the Chase Sapphire Preferred card or the Ink Business Preferred card, you can redeem your points for 1.25 cents apiece on the Chase Travel portal or 1.5 cents apiece with the Chase Sapphire Reserve card.

So, while the Freedom Unlimited card gives 1.5% cash-back on Costco purchases, that’s more accurately equivalent to earning 1.5x Ultimate Rewards points since I also have the Chase Sapphire Preferred card. Unlike cash-back, which can only be redeemed for 1 cent per point (e.g., 10,000 points equals $100), I get double (or more) that value when I redeem Ultimate Rewards points.

Final Thoughts

I won’t discount the Costco Anywhere card — it’s certainly a great option for earning cash-back rewards with the popular warehouse store. However, I prefer earning more travel points, and the Freedom Unlimited card lets me do that with a solid 1.5% rate. I appreciate the flexibility it gives me to reduce my travel costs on flights, hotels, and activities.