The Lesser-Known Reason Everyone Should Have a Costco Executive Membership

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Costco’s Executive membership costs double than a basic one. But read on to see why it makes sense for almost anyone. [[{“value”:”

Joining Costco could help you save money on everything from groceries to cleaning supplies to apparel. And many members find that they can make back their Costco fees in the form of savings throughout the year.

There are two Costco membership tiers you can choose from. A Gold Star (basic) membership at Costco will run you $65 per year, while an Executive membership will cost you double at $130.

The Executive membership comes with a giant perk, though. You get to earn 2% cash back on your Costco purchases. And if you shop at Costco pretty often, you may find that you can earn enough cash back from an Executive membership to more than make up for the $65 extra it costs.

But even if you’re not such a frequent Costco shopper and you’re not sure you’ll make back the $65 upgrade fee, getting an Executive membership still makes sense. Here’s why.

You’re guaranteed to recoup your Costco Executive upgrade cost

It takes $3,250 in annual Costco spending to make back the $65 extra an Executive membership costs. If you’ve been a Costco member for 20 years and your annual spending has never once exceeded $1,000, then in your situation, it could pay to stick with a basic membership since it costs a lot less. But for most people, it makes sense to try the Executive membership.

See, the so-called risk of upgrading to an Executive membership is not making back your $65 from the 2% cash back. But here’s a lesser-known rule: If you don’t make back your Executive membership upgrade fee, you can downgrade your membership to a Gold Star one after a year. And at that point, Costco will refund you the difference between the cash back you did rack up and the $65 upgrade cost.

So, let’s say you decide to buy the Executive membership but only spend enough to earn $50 back. If you downgrade, Costco will refund you $15. So either way, you’re guaranteed your $65 upgrade fee back. And you might earn a lot more than that if you shop at Costco regularly or buy a few big-ticket items.

For example, vacation packages booked through Costco Travel are eligible for cash back when you have an Executive membership. And you might easily spend more than $3,250 on a family trip, depending on your destination. In that situation, a single purchase could put more than $65 cash back in your pocket.

Similarly, you may decide to buy a major appliance or furniture from Costco. These items, too, could bring your spending to $3,250 or a lot more.

It’s worth taking the leap

There’s a reason Costco’s Executive membership is more popular than its basic one. The option to rack up cash back on purchases is one most shoppers don’t want to give up. If you have a Gold Star membership, it makes sense to upgrade to the Executive membership and see how things go, given that there’s no actual financial risk involved.

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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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