Is the Costco Executive Membership a Waste of Money for You?

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The Costco Executive membership could be a waste of money if you don’t spend enough or take advantage of the perks. Here’s how to decide whether to upgrade. [[{“value”:”

Costco offers two different membership tiers. There’s the Gold Star membership, which costs $60 annually, and the Executive membership, which costs $120.

If you are joining the warehouse club, you may be tempted to spring for the upgraded membership because it comes with some perks that the Gold Star membership doesn’t offer. But, would doing so be a waste of the hard-earned money in your bank account, or would it be the right choice?

Here’s how you can decide.

How much money do you spend at Costco?

There’s one big question you need to ask yourself first that will help you to decide whether paying an extra $60 for the Executive membership makes sense. You need to ask yourself how much money you actually intend to spend at Costco over the course of the year.

The reason this is important is because the Costco Executive membership offers an annual 2% reward on qualifying purchases. Once a year, you get a reward equal to 2% of all that you spent at Costco throughout the year — up to a maximum reward of $1,000.

Now, if you do some quick math, you can see that if you are spending $3,000 per year at Costco, you will end up earning $60 back because of it. So, if you break out the credit cards often enough that you spend this much or more, the Executive membership is worth it for you. The cash back you earn will cover the added cost of the membership upgrade.

If you spend more than $3,000, your membership would more than pay for itself. Say, for example, you spent $6,000 over the course of the year at Costco. You’d get $120 back and Costco would have paid you $60 for choosing the upgrade.

If you spend less than $3,000, though, then you’d be better off with the Gold Star membership unless you take advantage of the other exclusive perks the Executive membership offers.

Will you take advantage of other Executive membership perks?

While the 2% annual reward is the biggest draw for most people, there are other benefits to Executive membership.

These advantages include bigger discounts on other services offered through Costco’s partnerships, including lower cost checks from its check-printing service or discounts on auto insurance. Free roadside assistance is also available for those who are covered through Costco’s auto insurance program.

If you’ll spend less than $3,000 per year at Costco, you’ll want to read up on the Executive membership perks carefully. If you aren’t going to use its other services, like home, auto, or pet insurance or printing services, then you’d most likely be better off going with the Gold Star membership tier.

For many people, the big draw is Costco gas and their warehouse club purchases, not these extra services — so the additional savings from them may not be a reason to pay the upgraded membership fee. But it all depends on what your goals are for joining the warehouse club and what your shopping patterns happen to be.

The important thing is, by taking the time to understand the value of these added benefits, you can make the choice that’s right for you.

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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.Christy Bieber 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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