4 Things You Should Know About a Costco Executive Membership

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Looking into getting an executive membership at Costco? Read on for some must-know facts about how the program works. 

For many people, the decision to get a Costco membership is an easy one. What you spend on a membership each year, you might more than make up for in the form of massive savings on groceries, household essentials, and other purchases.

If you currently have a basic Costco membership, you may be thinking of upgrading to an executive one. That way, you can enjoy even more perks. Here are some things you should know about the executive membership program.

1. You’ll pay twice as much as you will for a basic membership

A basic Costco membership costs $60 a year, while an executive membership costs $120. Clearly, that’s a big difference in price. But in exchange, you’ll be eligible for 2% back on every Costco purchase you make, whether it’s at a store or online. It’s similar to how you might get 2% cash back from your credit card for making purchases — only while your credit card might only give you 2% back in certain categories, at Costco, you’ll get 2% back on everything.

2. You’ll break even on that extra cost if you spend $3,000 a year

The idea of snagging 2% cash back on your Costco purchases might sound appealing. But you’ll want to make sure it’s worth shelling out an extra $60 a year for an executive membership. The decision becomes a lot easier, however, when you realize that $3,000 in annual Costco spending is your break-even point.

When you spend $3,000 in the course of a year, you get $60 back — the same extra $60 it costs to upgrade your membership. So if you look at your credit card bills from the past year and see that you’ve spent at least $3,000 at Costco, then it’s a sign that an executive membership may be right for you.

3. You can upgrade at any time during the year

Your Costco membership might renew every year during a specific month. But you don’t have to wait until your membership is up for renewal to upgrade to an executive membership. Rather, you can upgrade at any time. However, purchases made prior to that upgrade won’t count toward your annual reward.

4. Your annual reward is capped at $1,000

While Costco will let you snag 2% back on any purchase you make with an executive membership, whether it’s groceries, furniture, or travel, there is a limit as to how much of a reward you can receive each year, and it’s $1,000. But to be eligible for a reward beyond $1,000, it means you’re spending more than $50,000 a year at Costco. And so chances are, this cap isn’t really going to be a deal-breaker for you.

Upgrading to an executive membership at Costco could be a move that really saves you money, so it’s worth running the numbers to see if it’s worth it. And you may find that once you upgrade, you’ll never want to go back to a basic membership again.

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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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