Why Warehouse Clubs Only Accept Certain Credit Cards

If you shop any of the big warehouse clubs such as Sam’s or Costco, you will notice that their credit card acceptance policy varies. Many of the big box stores make exclusive deals with the banks to exclusively accept their card. Costco has an exclusive deal with American Express meaning that is the only card you can use there. Until recently Sam’s Club exclusively only accepted Discover card, but recently is now accepting Master Card.  

Why do warehouses clubs cut exclusive deals with credit card vendors? These agreements are in place to help keep costs low. For example when you buy an item from a regular store and use a credit card, the credit card company takes a percentage of the amount that was charged to the store. Each credit card company charges a different percentage with American Express being the highest. So if a warehouse club like Costco wants to accept American Express they will give exclusivity to them in exchange for a lower transaction fee. This works out for both parties as Costco will have to pay lower fees and American Express gains more card members that want to shop at Costco. The customer does not pay any more than the total price amount of the items purchased.

The clubs also offer their own line of credit to customers’. These cards usually have high interest rates and are only good at a limited number of stores and their corresponding gas stations. Other stores like to automatically renew your membership onto the store credit card if you have one so beware if you do not want to renew your membership to that club.  

Most all stores still accept checks and cash, but these days with all the cash back rewards credit cards are giving it only makes sense to use a rewards credit card at those stores and rack up. You might even consider using a debit card that has some sort of rewards program attached to it as well. The stores also welcome debit cards as they usually have lower transaction fees than credit cards.  

Before you join a club store, make sure to understand their card acceptance policy. Each is different, but if you have the right card you can end up making a little bonus on the side while doing your normal shopping.