When you join Costco, you have a choice. You could pay $65 a year for a standard Gold Star membership that allows you to shop at the warehouse club. Or you can upgrade to the Executive Membership for $130 per year. In exchange for the extra $65 an Executive membership costs, you get 2% cash back on your Costco purchases.
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You may be unsure about purchasing Costco’s more expensive membership. Or maybe you’ve already made that leap. Anyway, here are three interesting facts about Executive Membership and how it works.
1. You are guaranteed your upgrade costs even if you don’t return
The problem with upgrading to Costco’s Executive Membership is that you run the risk of not spending enough to recoup the extra $65 it costs. It takes $3,250 per year in Costco spending to earn $65, as the Executive membership gives you 2% back on purchases. So once you spend even $1 more, you’ll be ahead financially.
But here’s a little-known secret about Executive Membership. If you don’t spend enough to earn $65 back during the year, Costco lets you downgrade your membership and refund the difference. For example, if you spend $2,700 at Costco for a year and only earn $54 back on your Executive membership, Costco will refund you $11 when you downgrade, so you get your $65 back anyway.
Meanwhile, if you Doing If you end up spending more than $3,250, you can have quite a bit of money in your pocket this year, especially if you combine the Executive membership benefit with a credit card that offers great rewards. Click here for a list of the best credit cards for Costco shoppers.
2. It’s Costco’s most popular membership, despite costing twice as much
Since an Executive membership at Costco costs twice as much as a Gold Star membership, you might assume that most people won’t be willing to fork over the extra money. But actually the Executive membership is the most popular at Costco. The company says 52 million members are Executive-type, which amounts to just over half.
Now you might assume that if you’re only an occasional Costco shopper, there’s no point in paying extra for the Executive membership. But you never know when a one-time purchase will take you over the $3,250 mark, making the Executive membership worth it. Since there’s no risk involved, it’s worth giving it a try, even if you’re unsure whether you’ll get your money back.
3. The maximum amount you can earn back has just been increased
On September 1, Costco increased the cost of an Executive membership from $120 to $130. At the same time, the maximum amount you can earn per year with an Executive membership was increased from $1,000 to $1,250.
That may seem like a positive change at first. But it’s also unlikely to affect you.
To earn $1,250 in cash back through an Executive membership, you’ll need to spend $62,500 per year at Costco. That is a lot of of bulk groceries. This change will not have much impact for the average customer. However, if you have a lot of large purchases, it is possible you could end up making extra money back.
For example, suppose you just bought a house and need to furnish every room. If you buy a living room set, multiple bedroom sets, a kitchen table, chairs, accessories, patio furniture, and multiple TVs from Costco in addition to your usual groceries and household items, you could conceivably take advantage of the new maximum reward. .
But overall, your goal shouldn’t be to chase a higher Executive Membership reward by making more purchases than necessary. Instead, shop as you normally do and see how much money you get back at the end of the year — knowing that in the worst-case scenario, you’ll break even on your $65 upgrade cost.
There’s a reason why Costco’s Executive Membership is so popular. Consider giving it a try and see how much it benefits you.
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I bet you didn’t know these three things about Costco’s Executive Membership. Originally published by The Motley Fool
