Costco Announces Fee Hike: Here’s What It’ll Cost You

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After keeping fees steady for years, Costco is raising the cost of its memberships. Read on to find out what you’ll have to pay. [[{“value”:”

One of the things that makes Costco so unique as a retailer — aside from its super low prices — is that you have to pay for a membership to access the store. And while you can technically shop at Costco.com without a membership, online orders placed by non-members are assessed a surcharge. Plus, certain items on the site are members-only deals — hence the incentive to pay up for full Costco access.

Since June of 2017, Costco’s membership fees have held steady at $60 per year for a basic membership and $120 a year for an Executive membership. But Costco just announced that come Sept. 1, the cost of its memberships will increase. So you may want to lock in a membership at the lower price point while you can.

What a Costco membership will soon cost you

Beginning Sept. 1, the cost of a basic membership at Costco will rise by $5, bringing your annual cost to $65. The Executive membership, meanwhile, is increasing by $10 for a total of $130.

But the Executive membership is also getting a boost. Currently, the maximum amount of cash back you can snag with one of these memberships is $1,000 per year. Once the fee increase takes effect, Executive members will be eligible for up to $1,250 cash back per year.

Granted, as it is, it’s hard to snag the maximum reward on the Executive membership, because doing so would require you to spend $50,000 in a single year to get $1,000 at a rate of 2% back. To score $1,250 back, you’d need to spend a whopping $62,500 in a single year. Even if you shop at Costco on a weekly basis and spend $200 per trip, that’s still only about $10,000 in annual spending — enough to justify the Executive membership upgrade, but not nearly enough to snag its full cash back benefit.

Should you pay more for a Costco membership?

At a time when life has gotten so expensive, nobody wants to see their costs go up. And that extends to Costco memberships.

But one important thing to keep in mind is that if you’re getting great value from your Costco membership at the current price point, then chances are, it makes sense to pay $5 or $10 more and retain your access to the store. Even when you account for a higher annual fee, chances are, your savings throughout the year will more than make up for what you spend on your membership.

And remember, the extra $5 or $10 you’re looking at paying comes to about $0.42 per month for a basic membership or $0.83 for an Executive membership. When you break it down that way, it’s kind of hard to get upset about the extra cost.

Remember, too, that Costco uses the revenue it makes from membership fees to offset its operating costs. This allows Costco to not only expand its inventory, but offer up the ultra low prices it’s known for.

So while it’s definitely annoying to see any expense go up, it’s kind of hard to get too up in arms about Costco’s decision. And remember, the store’s fees have remained the same since mid-2017. So the fact that Costco held out for a good seven years before imposing an increase is pretty darn generous in its own right.

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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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