If you have the TrueEarnings® Card from Costco and American Express, you’ll probably get a new card in the mail from Citi and Costco sometime this summer, according to an SEC filing from Costco. But you won’t have to apply for the new card, and it probably won’t result in a separate entry on your credit reports.
Costco announced last year that it was changing its co-branded credit card from an American Express to a Visa issued by Citi. Citi is expected to purchase AmEx’s TrueEarnings credit card portfolio by March 31. In that transaction, Citi will acquire the accounts of existing Costco cardholders, including information about debt owed and credit ratings. Current holders of the TrueEarnings® Card from Costco and American Express will get a new card — a Visa — as well as a new card number, because Visa and AmEx have different account-naming conventions. But it will likely show up as the same old account on your credit report.
New card number, likely no credit impact
When credit card portfolios are sold from one bank to another, lenders usually opt to issue new cards while continuing to report activity as the same account, following credit reporting guidelines set by the Consumer Data Industry Association.
Under current standards, the transfer and account number change is noted in the account description on credit reports, but it won’t affect the average age of your accounts or trigger a hard credit inquiry, meaning it shouldn’t affect your credit score. Your new Costco Citi card and your TrueEarnings® Card from Costco and American Express should show up as the same account on your credit report. Such a change does not require your permission.
If Citi wanted to report the card as a new account, it would have to get you to apply for a new card and perform a hard inquiry on your credit first. So far, it doesn’t look like that’s going to happen. “It is unlikely you will need to apply for the new Costco Visa Card,” reads an FAQ letter mailed to TrueEarnings cardholders last year.
But the specifics have yet to be announced.
“It would be premature to comment on specifics of the portfolio,” writes a Citi spokesperson in an email. Both Costco and American Express declined to comment on how new accounts might be reported.
MORE: Does a Credit Card Upgrade Create a New Account? (LINK to Claire M. story)
AmEx not offering automatic conversion
In an effort to retain customers who hold the TrueEarnings® Card from Costco and American Express, AmEx has been advertising its other credit cards — the Blue Cash Everyday® Card from American Express, for example – to customers in the Costco portfolio, according to a 2015 SEC filing.
If you’ve received these offers, keep in mind that these new cards won’t show up in your mail automatically like the new Costco Citi card. You’ll have to apply for them. That could trigger a hard pull on your credit and lower your average age of accounts, causing a small dip in your credit scores. However, at least one Costco customer has told NerdWallet of being approved for a new AmEx card without a hard pull.
AmEx is not able to automatically convert TrueEarnings® Card from Costco and American Express customers to other AmEx cards with the same card number, American Express spokeswoman Elizabeth Crosta writes in an email.
If you don’t shop at Costco frequently but want to keep using an American Express card, it might make sense to cancel your TrueEarnings® Card from Costco and American Express and apply for one of these offers — that is, after you’ve spent your annual TrueEarnings reward coupon, which is due to be paid out in February. But keep in mind that if you already have a proprietary AmEx card, you might not be eligible for a sign-up bonus on a new one.
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Next steps
If you frequently shop at Costco, waiting to receive the new Citi card may be your best bet. On this card, you’ll earn the same rewards as you would with TrueEarnings® Card from Costco and American Express, according to Costco’s SEC filing. And because it’s a Visa, you’ll also be able to use it in more places.
The switch won’t be completely automatic. If you have recurring payments set up on your account now, for instance, you’ll have to reset them on the new card. But you probably won’t be starting an account from scratch. You’ll build on an account history you’ve already established.
Claire Tsosie is a staff writer at NerdWallet, a personal finance website. Email: claire@nerdwallet.com. Twitter: @ideclaire7.
Image via iStock.
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