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A close friend of mine is anti-Costco for a reason I happen to find ridiculous. Read on to see what it is.
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We all have people in our lives who are set in their ways to some degree or another. One friend of mine, for example, will not pay for parking. If there’s a concert she wants to go to that can’t be accessed by public transportation, she won’t attend if she’ll be charged a fee to park her car at the arena.
And I have my own hangups, too. In my state (NJ), grocery stores are no longer allowed to give out disposable bags at checkout. If you stop into the store having forgotten to bring a reusable bag, your choice is to carry your items out by hand or purchase a reusable bag on the spot.
The latter is something that bugs me. So I’ve been known to walk out of my local Shoprite carrying a stack of cereal boxes in my arms with those red “paid” stickers on them to save myself the cost of a new bag.
Because I take this stubborn approach to refusing to buy a bag at the supermarket, I can relate pretty well to other people’s personal finance hangups. But one thing I struggle to get past is my good friend’s refusal to join Costco for what I consider to be a pretty silly reason.
When you’re hung up on a membership fee
Unlike regular supermarkets, Costco is a store you have to join to gain access to. Right now, a basic membership to Costco costs $60 a year, while an Executive membership costs $120. The latter option gives you 2% cash back on all Costco purchases, though, including those made online.
My close friend has a large family and spends a small fortune on groceries every week. She can clearly benefit from a Costco membership for the option to buy in bulk. And I’ve even offered to take her to Costco with me and get her in on my membership.
But my friend refuses to give Costco her business because she doesn’t believe in having to pay to be able to go to a store. So even though she wouldn’t be the one paying in this case, she’s still opposed to the idea of paying in general.
While I can see her point, one thing my friend doesn’t realize is that it’s because of those fees that Costco can offer such competitive prices on the items it stocks. Since Costco gets a lot of revenue from membership fees, it doesn’t need to make as much of a profit on each item it sells — hence the lower prices.
In fact, I shop at Costco once a week and usually save myself at least $20 on groceries and household items compared to what I’d spend at a regular supermarket. So while I’m paying $120 a year for an Executive membership, that fee pays for itself in under two months based on my shopping habits.
Look at the big picture
If you’ve avoided joining Costco due to the cost of a membership fee and not wanting to pay it, I highly suggest that you try to look at the big picture and see if you stand to save money all in by shopping there.
One thing it pays to do is find a friend or neighbor with a membership, visit your local store, and check out prices for yourself. Don’t just look at Costco’s online prices — many products are considerably cheaper when you buy them at a warehouse club store.
If you can see yourself shopping at Costco frequently, then you may find that the savings you reap on your purchases well exceed the cost of your membership fee. And remember, too, that Costco guarantees customer satisfaction. So if you’re unhappy with your membership, you can cancel at any time and get an immediate refund.
I really do hope for my friend’s sake that she’ll change her mind about Costco one day, because I know her grocery bills are brutal. But just as I refuse to pay for a bag to put my groceries into, I have to accept the fact that paying for Costco just isn’t something she wants to do. Still, I think it’s important for non-Costco members to recognize that there’s a reason the warehouse club giant charges those fees — and that they shouldn’t necessarily be a deal-breaker for membership.
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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.
