Costco just made a huge change — and furious customers are threatening to cancel memberships

costco shopper
costco shopper

(LM Otero/AP Images)

Costco's credit-card swap has customers calling the transition a "debacle" and threatening to cancel their memberships.

On Monday, Costco finalized its partnership with Visa and Citi that makes Visa the card of choice at the budget retailer, ending a 16-year partnership with American Express. With the change, Costco customers who earn rewards through a Costco co-branded credit card will need to use the Costco Anywhere Visa — not the TrueEarnings American Express Costco card.

However, many Costco members say they have not received their new Costco Visa credit card in the mail or are struggling to activate the new card.

Citi has been unable to keep up with questions and complaints from customers about the change, leading to some Costco members waiting for hours to speak with Citi representatives. Costco has 81 million members worldwide.

"The switch over from American Express to Citi Visa at Costco must be a huge mess," longtime Costco member Glenn Ginsburg wrote in an email to Business Insider. "Can't get to speak with a representative regarding my business credit card — have either been hung up on due to large call volume or waiting for 53 minutes to be transferred to another representative."

Ginsburg says that he eventually spoke with someone in Costco's corporate office who was unable to help beyond providing the phone number for Citi assistance that Ginsburg had already called. The Costco customer-relations employee told Ginsburg that Costco had been receiving similar calls from other members, and that while Costco had prepared for the change, Citi may not have put sufficient additional resources toward the project.

A Costco shopping cart is shown at a Costco Wholesale store in Carlsbad, California September 11, 2013.  REUTERS/Mike Blake/File Photo
A Costco shopping cart is shown at a Costco Wholesale store in Carlsbad, California September 11, 2013. REUTERS/Mike Blake/File Photo

(Thomson Reuters)

Many customers' biggest complaint for Citi is that they have not yet received their Costco Anywhere Visa, which was supposed to be shipped to cardholders in May. As of Monday, the TrueEarnings American Express Costco card — and any other non-Visa credit or debit cards — can no longer be used in Costco.

"I'm thinking that in spite of having many months to work out the distribution of new cards, Citi has committed a 'fail,'" a Costco member who hadn't received the replacement card wrote in an email, calling the switch a "debacle." "Costco may live to regret cutting off AmEx."

Citi responded on Twitter to customers frustrated by long wait times.

Other users expressed their anger on Facebook.

The most common problem expressed in posts on Costco's Facebook page — which has been flooded with complaints — are from users who have not yet received their credit cards.

"The Costco-Visa was a huge unorganized mistake," writes one Costco member. "I have spent over ten hours — over the last 4 weeks — on the phone trying to find out where my new card is, and I still can't get a straight answer."

Citi Costco
Citi Costco

(The Costco Anywhere Visa Card by Citi.Citi Costco)

"This new 'relationship' with Citibank is a SHAMEFUL OUTRAGE!!" reads another complaint. "I do not have a valid card. I was LIED TO about cards being sent overnight at Citibank's expense. You are losing my monthly groceries, my office supplies, and our family travel business."

Again, the problem of the missing cards and other Costco Visa card confusion has been further complicated by Citi's inability to deal with the volume of calls from customers.

"Worst credit card transition ever — 4 hours and counting on the phone with Citibank and they still can't get my cards to me," writes one customer. "Costco customer service was zero help getting me a temp card at the warehouse too. Saving money isn't worth alienating your members ... seriously rethinking my patronage."

Difficulties related to the credit-card swap have a number of customers threatening to boycott or cancel their memberships.

"To date, more than 11 million cards have been issued to existing Costco cardmembers," Citi spokesperson Jennifer Bombardier told Business Insider on Wednesday. "Due to the tremendous response, some customers experienced delays reaching customer service, however call volumes are starting to return to normal. We sincerely apologize to those who have been inconvenienced and are absolutely committed to serving our existing and new cardmembers."

Costco's new credit card has some of the best rewards on the market, significantly improving on the benefits of the Costco American Express card. However, if customers aren't receiving or can't activate their new Costco Visa cards, the quality of the rewards, frankly, will not matter to some Costco members who are now unable to shop at the retailer.

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