Without fail, every time I shop at Costco I get asked “would you like to become an executive member?” I tend to always brush the person off and leave the store more annoyed than I already was from dealing with the chaos of shopping there.
The executive membership is $110 a year – $55 more than the base “Gold Star” membership. The benefits of being an executive member include savings on services, such as express courier shipping, special coupons and a reward of 2% of your Costco purchases back, up to $750 per year (in a voucher that can only be used at Costco).
During my most recent Costco visit (goodbye $200) I started to question if it might actually make sense for me to upgrade my membership and did some number crunching. This is what I found.
If you spend upwards of $250 a month ($3000 a year) then the executive membership pays for itself and there’s no harm in upgrading. If you spend anything less you’ll be losing money and it doesn’t make sense.
Now say you spend closer to $450 a month (or around $5500 a year). This is where upgrading should be seriously considered as you will end up covering the entire cost of your membership. It sounds like a lot of money for one store, but if you do a majority of your grocery shopping there (including staple items like toilet paper and paper towels) it’s easy to spend that in a year at Costco.
There are some restrictions of course and items like tobacco and gas is excluded from the 2% reward. And while purchases by both the main cardholder and secondary cardholder will be used to calculate the 2% reward, only the main cardholder can use the voucher that is sent at the end of the year. Full conditions of the membership can be found here.
What I suggest doing is adding up all your Costco purchases over the last year. Exclude the items they don’t count (gas, etc.) and see how much you spent on average. If it’s more than $250 a month and you feel you will keep this up you might want to consider upgrading your membership.
As for my average, it was about $330 a month over the last year. Guess I won’t be brushing off the next person that asks me to upgrade.
Share your thoughts on the Costco executive membership in the comments below.