Shopping at Costco could save you a lot of money on groceries and other items you use at home regularly. But it’s important to choose the right membership so you get the maximum amount of value.
A basic membership at Costco costs $65 a year. An Executive membership at Costco costs $130 a year. So you may be inclined to stick with a basic membership and call it a day.
But the Executive membership at Costco also gives you 2% cash back on your purchases. And if you spend enough money at Costco, you may earn enough cash back so your membership is effectively free.
You might assume there’s no way you’ll spend enough money at Costco during the year for your Executive membership to end up being free. But when we break things down on a monthly basis, it’s more doable than you’d think.
It takes $6,500 a year in Costco spending to earn $130 at a rate of 2% back. That’s about $542 per month.
If you only shop at Costco once a month, you may not spend over $500 on each trip. But if you’re someone who goes to Costco every week and buys most of your family‘s groceries and household supplies there, then it’s conceivable you’ll spend about $135 per week. That puts you at about $542 if we assume four weeks per month.
Also, there may be some months when you end up buying one-off items at Costco. If you replace your vacuum cleaner one month, that could mean spending an extra $200 or $300. If you buy some apparel for your kids during the winter, that might add an extra $150 to that month’s haul.
So all told, if you’re a regular Costco shopper, spending $6,500 a year may be easier than expected. And that effectively gives you an Executive membership without having to spend a dime, since you’ll get your $130 refunded to you in the form of your annual reward.
An even better way to maximize your Executive membership
If you shop at Costco fairly often, the Executive membership might be a no-brainer. But you should know that you aren’t limited to the 2% back it gives you.
If you pair your Executive membership with the right credit card, you can double up on cash back and save a bundle during the year. Click here for a list of the best credit cards for Costco shoppers.
Finally, even if you don’t spend enough at Costco to make back your entire Executive membership fee, the upgraded membership might still make more sense than a basic one.
Say you go to Costco once a month and spend $300 per visit, or $3,600 per year. At a rate of 2% back, you’re earning $72.
When you subtract the $65 it costs to upgrade to an Executive membership, you’re still ahead by $7. So even if you can’t earn $130 back on that membership, it might still pay off.
