Points or cash back: the best rewards credit card for Costco shoppers in Canada

Points or cash back? For a Costco shopper in Canada, it's usually both: a points card for restaurants and groceries elsewhere, and the cash back CIBC Costco Mastercard at Costco. On our sample budget of $2,000 a month, the MBNA Rewards World Elite was worth $552 a year in travel after its $120 fee, against $336 on the Costco card, but the Costco card earned the most where you shop at Costco.

How much are points worth compared with cash back?

A point is only worth what you redeem it for, and most programs pay less for cash than for travel. From each issuer's page:

So 5 points per dollar is 5% only if you book travel; taken as cash on MBNA it's about 4.2%, and on National Bank's card balance option it's 2%. Cash back is simpler: 1% is 1% whatever you do with it.

Which points cards can you use at Costco?

Only the Mastercards. Costco warehouses and gas stations in Canada take Mastercard as their only credit card, so Amex Cobalt, the Aeroplan cards (Visa or Amex) and the RBC Avion Visa don't work there; there's no Aeroplan Mastercard (see Costco and Aeroplan). The points Mastercards that do work, MBNA Rewards World Elite, National Bank World Elite and PC World Elite, all earn their base rate in the Costco warehouse, because Costco is coded as a wholesale club rather than a grocery store (National Bank's 2 points on gas does apply at Costco's gas bar).

Which earns more for a Costco household, points or cash back?

We ran the same sample budget as our best cash back cards guide: $2,000 a month, $700 of it at Costco. Amex Cobalt isn't included, because Amex's page doesn't say whether grocery stores earn 5 points or what monthly limit applies.

Points win overall here because MBNA and National Bank pay 5 points on restaurants and groceries, where the Costco card pays 3% and 1%. At Costco itself the picture flips: the Costco card's 3% at the gas bar and 1% in the warehouse came to $132, more than any points card earned on the same Costco spending. Used together, MBNA everywhere except Costco and the Costco card at Costco, the pair was worth about $600 a year in travel after MBNA's fee (Sample data).

Should a Costco shopper choose points or cash back?

• You'll redeem for travel and earn $80,000 or more: a points World Elite for restaurants and groceries, and the CIBC Costco Mastercard at Costco. That pairing gets the travel value and keeps Costco's 3% at the pump.
• You want cash, not flights: cash back. MBNA's cash rate turns its 5 points into about 4.2%, and National Bank's card balance option into 2%, so a cash back pair like the one in our two-card guide is simpler.
• You shop at Loblaw stores and Shoppers: the free PC World Elite, which pays 3% in PC Optimum points there and 1% at Costco.
• You have an Amex or Visa points card already: keep it for everything else and carry a Mastercard for Costco.

What do points cards cost to get?

More than most cash back cards. MBNA Rewards World Elite and National Bank World Elite both need $80,000 personal or $150,000 household income, and charge $120 and $150 a year. The PC World Elite is free but needs the same income. Amex Cobalt costs $15.99 a month ($191.88 a year). The CIBC Costco Mastercard needs $15,000 of income and has no fee.