3 Unexpected Drawbacks of a Costco Executive Membership

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I love my Costco Executive membership. But here are three pitfalls you might encounter. [[{“value”:”

When I first became a Costco member, I decided to stick with a basic membership to save money on the fee. It wasn’t until I started shopping at the store more frequently that I decided to upgrade to an Executive membership.

An Executive membership at Costco currently costs you $120. That’s double the cost of a basic membership. Those prices have also been in place for quite some time now, so it wouldn’t be a shock to see them rise in the not-so-distant future — though Costco had no official plans to raise them as of its last earnings call in May.

The nice thing about the Executive membership is that you earn 2% cash back on your Costco purchases — and that extends to Costco.com orders as well. But there are a few surprising drawbacks to the Executive membership you should be aware of.

1. Not every purchase gives you cash back

If you spend more than $3,000 a year at Costco, the Executive membership upgrade makes sense. That’s because 2% of $3,000 is $60, which is exactly what the upgrade costs. So once you’ve spent even $1 more, you’re ahead financially.

That said, several Costco purchases aren’t eligible for 2% back with an Executive membership. And perhaps the most frustrating one — at least in my book — is gas.

I usually make a point to fill up my car at Costco because it has the cheapest gas prices in my area. But it’s annoying to not get the extra cash back at the pump. I make up for it, though, by using a credit card with great gas rewards, so you can do the same.

You’re also not eligible for cash back on an Executive membership when you spend money at the food court at Costco. And stamps, tobacco, and cigarettes aren’t eligible for cash back, either. Plus, if you buy a Costco Shop Card (the store’s version of a gift card), you won’t get cash back there, either.

2. You may be tempted to spend more

When I first upgraded my Costco membership, I was nervous about not spending enough to make up for the extra cost. You might find yourself spending extra to justify the cost of the Executive membership, or to snag more cash back.

But remember, you’re only getting $0.02 per $1 you spend. So the numbers are never going to work out in your favor if you buy extra things for the express purpose of getting more cash back out of your Executive membership.

You should also know that you don’t have to worry about making back your Executive membership upgrade fee. If you don’t snag at least $60 cash back after your first year, Costco will let you downgrade to a basic membership and reimburse you the difference.

So if your Executive membership only puts $45 back in your pocket after a year, you can downgrade and get the remaining $15 paid back to you.

3. You no longer get early access to Costco

When I first upgraded to an Executive membership at Costco, one of the perks was getting early access to the store. Costco did away with that benefit a long time ago. That’s a shame, because the one thing I dislike most about shopping at Costco is having to perpetually battle crowds. That early access helped minimize those crowds to some degree.

However, I find that Costco is usually less busy when it first opens and in the hour or so before it closes. So now, I do my shopping then to avoid having to wait in long lines or squeeze my way through the aisles.

Costco’s Executive membership makes sense for me based on the amount I spend at the store each year. And it may be a good investment for you, too. Just be aware of these downsides so you know exactly what you’re getting into.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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