AmEx TrueEarnings Costco Card Review

American Express TrueEarnings Credit Card Review

“Get Costco access and a no-nonsense cash back card to boot”

Traditionally, American Express has been known for their charge cards, beginning with the original paper card in 1958.  In 1966, the Gold card was released, then in 1984, the exclusive Platinum card was made available to established clientele.  However, in 1987, American Express entered the credit card market by offering their first revolving credit product: the Optima card.  Though since discontinued, the Optima had hatched an entire line of revolving credit card products, which has continued to evolve to the present.  Today, American Express offers a diverse selection of credit card products, ranging from simple cash back cards to the more niche travel reward cards.

One of my favorite American Express “revolving” cards is the TrueEarnings card.  It is a co-branded (with Costco Wholesale) cash back credit card that is offered to both personal and business users.  The business card is identical to the personal version in all ways except for some minor benefits: a higher cash back award for gas (4% vs. 3%) and slightly higher annual cash back caps.

The TrueEarnings card does not have an annual fee, but the unique requirement of the card stipulates that you have to be either a personal or business member of Costco Wholesale.  By default, your Costco membership annual dues are charged to your TrueEarnings card, so the card effectively has an annual fee of whichever Costco membership level you sign up for.  The most affordable membership is around $50 a year, which I find to be reasonable for my needs.  I don’t shop at Costco too often, save for the occasional gas fill-up or grocery grab, so I find the $50 annual fee for my basic membership to be moreso a cost of using the TrueEarnings card for my business.  However, businesses and families who patronize Costco often will find that the TrueEarnings card knocks out “two birds with one stone,” in that you get a “free” credit card just for paying membership dues to a store that you’d shop at anyway.

Being a cash back card, the reward for using the TrueEarnings card are not Membership Rewards points, but rather, cold, hard cash in the form of an annual disbursement certificate.  This reward is redeemable only in person at a Costco warehouse, so you must maintain your membership to take advantage of the card’s yearly benefits.  Keep in mind that receiving your annual reward in the form of a physical certificate can be a benefit for some people; many cash back cards, including the AmEx Blue Cash, force the customer to redeem their cash back in the form of a statement credit that offsets future expenses.  First of all, this forces the customer to use the card a certain amount to fully redeem their credit.  Following this, it also gives the customer less freedom on how to negotiate the use of their reward, since a statement credit has less usability than cash in hand.  The TrueEarnings card gives you a true cash back reward that can be used for anything, anywhere.

The current cash back rewards for this card are as follows:

• 3% cash back for all gasoline purchases, subject to a per-fillup and annual cap (4% for the TrueEarnings business card)

• 3% cash back for using the card at restaurants, which includes fast food establishments, fine dining, and bars/lounges

• 2% cash back for travel, including airfare and hotels

• 1% cash back anywhere else, including Costco

The guaranteed 1% cash back anywhere is a reasonable reward offered with this card, which is comparable to the Chase Freedom or Discover More card.  However, if you are a personal cardholder or business owner, the gasoline and restaurant cash back rewards can be utilized very effectively with some strategizing.

Rocking the TrueEarnings card as a personal user

Of course, the easiest way to take advantage of this card as a personal consumer is just to carry it everywhere and use it for daily spending.  Most consumers’ daily necessary spending includes food and gasoline, so it shouldn’t be too hard to hit the 3% cash back categories consistently by loading everyday spending on this card.

Build your business while maximizing cash back

As a business owner, you probably have business related, tax deductible expenses.  All of your business expenses will earn the customary cash back reward, depending on the spend category; however, by wisely taking advantage of the bonus categories, you can accumulate a significant reward at the end of the year.

Let’s take gasoline as an example.  If you’re a transportation based business (tow truck company, limousine service, taxi service, shuttle service, etc.), you can give all of your drivers employee TrueEarnings cards.  Every time they fill up, you get 4% cash back.  Since the gasoline purchasing is a regular of your business, you can not only treat this expense as tax deductible (as always, talk to your tax professional or CPA about this), but you can also make loads of bonus cash back from an ongoing necessary expense.

If you’re in sales, expensing gasoline costs onto this card from driving back and forth to client meetings is also a wise use of this card’s gasoline cash back feature.

In my opinion, I find the restaurant cash back feature to be the strongest benefit to a business.  Unlike the gasoline benefit, the 3% restaurant cash back doesn’t have an annual or per-use limit…..so you can technically earn 3% all year round on an ongoing basis with some careful card usage.  Client entertainment at a restaurant would be an easy way to claim 3% cash back, but if you work with restaurants often as a part of your business operations, this is where the TrueEarnings card can really shine.

If you have ever promoted your business with public speaking events, the food you purchase for your clients and/or prospects can certainly add up.  Here are some business related activities I’ve done at restaurants, all of which have granted me the full 3% cash back from the TrueEarnings card:

• Client appreciation events at restaurants

• Public complimentary dinner and lunch seminars with prospective clients

• Hosting wine tastings and business networking mixers

• One on one dinner meetings with business partners and prospective clients

I have also worked with doctors who have promoted their business using restaurant seminars to great success, all while earning hundreds of dollars a month by placing this form of advertising onto their TrueEarnings card.  For example, a chiropractor who spends $10,000 a month on food at live seminars and makes an $18,000 gross profit from these events is taking home an $8,000 net profit and a $300 cash rebate from their TrueEarnings card.  $300 multiplied by twelve months is a $3,600 annual cash rebate, not counting non-restaurant expenses.  Not bad.

Other cash back cards

A discerning consumer or business owner may be wondering how the TrueEarnings card stacks up versus other cash back card offerings in the marketplace.  While the credit card industry is an ever evolving business, with new products being developed and released continuously, I believe that the TrueEarnings card is currently one of the better cash back cards in the marketplace today.  The main reason for this belief comes from the fact that many of this card’s cash back competitors (Chase Freedom, Discover More) offer more than 1% cash back from purchases in rotating categories, while the TrueEarnings card categories are fixed.

For example, with the Discover and Chase cards, one may earn up to 5% cash back at grocery stores for one quarter, but the next quarter, grocery stores are no longer on the list, and may be replaced with another category (e.g. gasoline, theme parks, movie theaters).  The nature of rotating cash back categories could have many consumers missing out on opportunities to maximize their cash back earning potential, since the rotating categories may not cover expenses deemed to be everyday and necessary, like food and gas.  With the TrueEarnings card, categories that may see heavy use throughout the year (restaurants and gas) will earn the fixed 3% cash back reward rate regardless of the time of year the card is used.  A 3% static payout all year round on everyday categories may earn a higher reward amount overall than a 5% payout on categories that consistently rotate by the quarter (and may not include categories that the average consumer would even spend a significant amount of money on, like theme parks).

Other benefits

The TrueEarnings card offers the same complimentary extended warranty, purchase protection, car rental insurance, and travel insurance as the basic American Express charge cards.

The following is a breakdown of the pros and cons of the TrueEarnings card:

The pros:

• Fixed cash back reward system that has no rotating categories

• Useful categories that covers common spending activities, including gas, restaurants, and travel

• The card doubles as your Costco membership card

• Optional feature: you can have AmEx print your picture on the back of your card; a great idea for addressing stolen cards and identity theft

• No annual fee – just a Costco membership is required

The cons:

• You are forced to have a Costco membership to apply for this card and also to retain the card.  If you terminate your Costco membership for any reason, this card can be frozen until you renew your membership.

• No ability to redeem annual cash back reward online; you have to walk into a Costco warehouse with the paper ticket in hand

• Reward is only distributed once a year, versus other cards that pay out your benefits on an ongoing basis

The Final Verdict

The TrueEarnings card can be effectively used by both personal cardusers and businesspeople, due to the fact that the enhanced cash back categories (gas, restaurants, travel) are common expenses most individuals have to pay for one way or another.  Although I don’t like the fact that the Costco membership is mandatory and that you are forced to redeem your annual reward in person, the TrueEarnings card is a no nonsense card that offers the benefit of cold, hard cash versus the more ambiguous points-based credit card reward programs.

The American Express TrueEarnings card can be applied for in person at any Costco warehouse at the customer service counter, or online directly with American Express:

Disclaimer: This content is not provided or commissioned by American Express.  Opinions expressed here are author’s alone, not those of American Express, and have not been reviewed, approved, or otherwise endorsed by American Express.  This site may be compensated through the American Express Affiliate Program.