Here’s Why I’ll Never Give Up My Costco Executive Membership

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An Executive membership at Costco costs twice as much as a basic one. Here’s why I’m sticking with it anyway. [[{“value”:”

When I first joined Costco, I didn’t have kids yet and therefore didn’t spend as much as I do now on groceries. But years back, I decided to upgrade to an Executive membership when my family started spending more on food, and I’ve stuck with it ever since.

In fact, there’s pretty much nothing anyone can say to convince me to give up that Executive membership — despite the higher cost. Here’s why.

A higher fee worth paying

A Gold Star membership at Costco currently costs $60 a year, while an Executive membership costs $120. Starting Sept. 1, though, the cost of a basic membership is rising to $65, while an Executive membership will cost $130. Either way, you’re looking at paying double for an Executive membership.

But the Executive membership comes with one giant perk — 2% cash back on your purchases. And when you shop at Costco as much as I do, getting the higher-cost membership is an easy call.

I do a Costco run almost every week, and I usually spend at least $100. That’s just what it costs to feed a family of five and get enough necessary supplies like paper towels, tissues, and cleaning products.

I also tend to turn to Costco for certain one-off purchases, whether it’s new fall jackets for my kids or gift baskets for my children’s teachers during the holidays. This extra spending, coupled with my regular weekly spending, makes it easy to recoup the cost of my Executive membership upgrade and come out with extra cash back in my pocket.

Right now, it takes $3,000 in annual Costco spending to make back the cost of the Executive membership upgrade. Once the store’s fee hikes take effect, it’ll take $3,250 to reach that break-even point.

Since my annual Costco spending typically comes to over $5,000, there’s no question that the Executive membership makes financial sense for me. At $5,000 in spending, I’m looking at $100 cash back. That gives me my $65 upgrade fee back and leaves me with extra money.

I’ll keep the Executive membership even if my Costco spending declines

There may come a point when I’m not going to Costco every week for groceries and supplies. But even then, keeping the Executive membership makes sense for one big reason — you’re guaranteed not to lose money on it.

If you buy the upgraded membership and don’t earn enough cash back to recoup the extra cost, Costco will allow you to downgrade your membership and refund you the difference. In other words, let’s say you buy the more expensive membership, but only earn $52 in cash back when you paid $65 for the upgrade. If you downgrade to a basic membership for the next year, Costco will give you back the $13 of your upgrade fee you didn’t recoup.

For this reason, I refuse to give up my Executive membership. And you may want to reconsider if you’ve been sticking to a basic one. Rather than assume you won’t make back your upgrade fee, evaluate your yearly Costco spending. You may be surprised at the total.

Also, don’t rush to dump your Executive membership if your household situation changes. You might spend less on groceries once you’re an empty nester. But you might also spend more at Costco on other things.

It pays to keep the upgraded membership and see what happens. Either way, you’re guaranteed not to lose any money.

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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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