Costco and Citibank filed an amendment to their co-branded credit card agreement with the SEC in September 2024 that replaced a single, flat purchase APR with four separate interest rates pegged to cardholders' FICO scores. The change took effect for new accounts by October 31, 2024, and existing Costco Anywhere cardholders began receiving change-in-terms notices starting in November 2024, with no fanfare, no press release, and no explanation beyond the fine print.
The practical result: members who carry a balance and fall into a lower credit tier now face a higher interest rate than they did before. Members with top-tier scores may pay less. But the flat-rate simplicity that made the Costco Anywhere Visa card easy to understand is gone, replaced by a pricing model that rewards the already-creditworthy and charges everyone else more.
TheStreet's Daniel Kline reported on the change, drawing directly from the SEC-filed amendment. The filing spells it out plainly: the single purchase APR listed in the Co-Branded Cardholder Account Terms would be replaced by four APRs based on the bank's FICO tiers, covering both consumer and small-business accounts.
The amendment, available through the SEC's EDGAR database, does two things at once. First, Costco exercised its contractual right to extend the initial term of its deal with Citi by three years, locking the partnership in through June 19, 2029. Second, and far more consequential for cardholders, the two companies agreed to scrap the old flat-rate APR structure.
The filing states that Costco and Citi "anticipate that tiered pricing will become effective by October 31, 2024 for new Co-Branded Card Accounts." For existing cardholders, the shift would follow "upon the effectiveness of a change in terms notice issued to such Co-Branded Cardholders (which notices will be issued starting in November 2024)."
What the filing does not include: the actual APR percentages for each of the four tiers, the number of cardholders affected, the prior flat APR, or any public statement from Costco or Citi explaining why the change was made.
The Consumer Financial Protection Bureau defines risk-based pricing as "the practice of setting or adjusting the price and other terms of credit offered or extended to a particular consumer to reflect the risk of nonpayment by that consumer." In plain English, the better your credit score, the lower your rate. The worse your score, the more you pay.
That principle is common across the credit card industry. But it was not how the Costco Anywhere card worked before September 2024. Under the old terms, every cardholder paid the same purchase APR regardless of credit score. The switch to tiered pricing means Costco's card now operates more like a conventional bank product, and less like the straightforward, member-first deal that helped build the warehouse club's reputation.
Costco has long cultivated an image of doing right by the people who pay annual membership fees to shop there. The company is famous for keeping its $1.50 hot dog combo unchanged for four decades, a commitment to value that became a cultural touchstone. The credit card shift cuts in the other direction.
Costco's relationship with credit card companies has a history of abrupt transitions. The retailer accepts only one credit card brand at a time, a policy that gives it enormous leverage over issuers but leaves members with little choice. For 16 years, that brand was American Express. Then, in 2016, Costco switched to Visa and Citi.
MarketWatch reported at the time that "Costco Wholesale Corp. has started to issue new Visa cards to its customers, who after June 20 will no longer be able to use their former Costco cards from American Express." Millions of cardholders had to adjust overnight.
The September 2024 amendment ensures the Citi-Visa arrangement continues through at least mid-2029. But the terms of that arrangement now look materially different from what cardholders originally signed up for.
The retailer has made other changes that caught members off guard. A recent food-court menu overhaul drew vocal pushback from shoppers who felt blindsided by the swap.
The SEC filing is a public document, but it is not the kind of document most Costco shoppers would ever encounter. It sits in the EDGAR database alongside thousands of other corporate filings, written in legal language, formatted for compliance, not for a family trying to figure out why their credit card bill looks different.
The change-in-terms notices that went out starting in November 2024 are the only direct communication most cardholders would have received. Those notices are typically brief, dense with regulatory boilerplate, and easy to overlook in a stack of mail.
No public comment from Costco or Citi accompanied the shift. No press release explained the rationale. The amendment does not state a reason for moving to tiered pricing. The filing simply records that the parties agreed to it.
That silence matters. Millions of Americans carry the Costco Anywhere card. Many chose it specifically because the rewards, including cash back on gas, which recently increased from 4% to 5% at Costco gas stations, made it one of the better no-annual-fee options on the market. The APR mattered less to people who paid their balance in full every month. But for those who carry a balance, even occasionally, the new tiered structure could mean real money.
Several important questions remain unanswered. The SEC amendment does not disclose the specific APR percentages assigned to each of the four FICO tiers. It does not reveal how many cardholders fall into each tier. It does not say how many members will pay more under the new structure versus how many will pay less.
Without those numbers, it is impossible to calculate the total cost of the change to Costco's membership base. But the structure itself tells a clear story: if you have excellent credit, you may come out ahead. If you don't, you won't. And the people most likely to carry a balance, the ones who actually pay interest, are disproportionately the ones with lower scores.
Costco's decision to remain quiet about the change only deepens the concern. A company that prides itself on transparency with members chose to let an SEC filing and a form letter do the talking on a policy shift that directly affects how much interest those members pay.
The warehouse giant has shown it can still surprise its loyal shoppers in ways big and small. Holiday closures and menu swaps are one thing. Restructuring the terms of a financial product that millions of families rely on is another category entirely.
Costco is hardly the only company moving toward risk-based pricing on co-branded cards. The practice is standard across much of the industry, and the CFPB's own definition treats it as routine. But "everyone does it" has never been a satisfying answer for consumers who chose a product precisely because it was simpler and more straightforward than the alternatives.
The Costco Anywhere card's appeal was always tied to the Costco brand promise: no frills, fair prices, honest dealing. A flat APR fit that identity. A four-tier, FICO-based pricing model fits the identity of a conventional bank.
When a company known for keeping a hot dog at a dollar-fifty for forty years decides to quietly tier its credit card interest rates by credit score, the change says something about where priorities are shifting, and it isn't toward the member filling up at the pump.