Mrs. 20SF and I just received our first annual Costco Executive Rewards membership rebate check in the mail a few weeks ago, after upgrading to the $120 Executive membership from the standard $60 “Gold Star” membership, last fall. We had been slowly increasing our annual Costco spend as we have shifted the majority of our grocery spend from other grocers over the years. We decided to give “Executive” a shot when the cashier stated that if we upgraded and don’t come out ahead versus the standard membership, Costco would refund the cost difference between the two membership levels.
Was the Costco membership worth it? I’ll share my results, but you’re not here to see if the cost of standard or executive Costco membership is worth it to me, you’re here to see if it is worth it to you. So I’ll break down the numbers to help you make that calculation.
Step 1: Understand the Differences Between Costco’s Membership Levels
There are 2 Costco membership levels:
1. Costco Gold Star Membership (the standard membership level):
- $60 membership fee per year
- No cash back rewards
2. Costco Executive Membership (the upgraded membership level):
- $120 membership fee per year
- 2% cash back rewards, up to $1,000 back per year (note that some items, e.g. alcohol and prescription drugs in some states, purchases of a Costco Shop Card, food court items, Costco gasoline, and optical exams are not eligible for the reward – here’s a full list)
- “Extra benefits” – includes discounts on insurance, travel deals, etc.
There are also business versions of these two, but they are the same cost and the only difference from the non-business versions above is the ability to add more people to the account.
Step 2: Disregard the Costco Credit Card Rewards
Ignore the cash reward benefits of the Costco Anywhere Visa Card by Citi. The card is the best credit card for Costco purchases and has a number of nice perks to it that make it a keeper, such as 4% cash back on gas, 3% on restaurants and travel, 2% back on all purchases at Costco and Costco.com, and 1% back on all other purchases. But, those rewards are untied and irrelevant to the Executive versus Gold Star calculation. Every Costco member gets the same cash back rewards if they have the Costco Visa – at Costco and elsewhere – regardless of their membership status.
You’ll get a separate annual rebate check for your Costco Anywhere Visa, but don’t confuse the two. Just ignore it in calculating the worth of Costco Executive membership. The 2 rebate checks are completely separate and unrelated.
Step 3: To Determine if Executive Membership is Worth the Cost, Compare the Upgrade Cost to the Cash Back Benefit
Here is how the math calculations work out when comparing the Executive membership ($120 fee) to standard Gold Star membership ($60 fee) levels:
| Monthly Purchases: | Annual Purchases: | "Gold Star" Annual Reward: | "Executive" Annual Reward | Executive "Benefit" (Reward - Cost): |
|---|---|---|---|---|
| $125 | $1,500 | $0 | $30 | -$30 |
| $250 | $3,000 | $0 | $60 | $0 (break even) |
| $500 | $6,000 | $0 | $120 | $60 |
| $1,000 | $12,000 | $0 | $240 | $180 |
| $4,167 | $50,000 | $0 | $1,000 (max) | $940 |
You can see that the current break-even is at $3,000 in spend over your membership year with the 2% cash back.
- Any spend below that amount, and your Executive membership upgrade fee was not worth the cost (and you should ask for a refund or downgrade if you think there is no way to surpass it in the future).
- Any spend above that, and you came out ahead versus your Executive membership upgrade fee, making the added $60 expense worth it.
In my first year, I received a check for $60.58 – so I came out a mere $0.58 ahead with the upgrade. I also did not use any of the “extra” benefits, so I personally do not place a value on those (your mileage may vary there).
Update: In my 2nd full year of membership, I ran the numbers again, post annual rebate. This time, I came up short of the $60 Executive up-charge, so I asked Costco for a membership fee refund for the difference, and I got it.
Is Costco Membership Worth it?
Putting membership levels aside, it’s worth asking the question: “Is Costco membership worth the cost?”.
And I’m not talking about the Executive membership here – I’m talking about ANY Costco membership.
This is one of those questions where the answer is going to be dependent on the purchasing habits of each individual consumer. I can tell you from my personal experience, that the savings in Costco gasoline, dog and cat food (check out my Costco Kirkland dog food & cat food review), toilet paper, frozen and canned foods, and Costco’s Kirkland alcohol offerings are easily in the hundreds of dollars per year versus other retailers. Any value on top of those purchases is gravy.
There are some other nice benefits to Costco membership as well. The Costco appliance warranty (1 extra year to manufacturer’s warranty), as well as extended warranties on electronics and other goods, is as good as any retailer out there. And I’ve never had a challenge returning an item that I was not happy with.
If you’re not familiar with Costco’s offerings and item pricing, or even if you are, here are the steps I would recommend, to help you determine if a Costco membership is worth the cost for you:
- Research the cost on staple items you regularly purchase, on a per volume (not per unit) basis, versus comparable items at alternative stores (Costco often has larger volume units, so per unit is a necessity).
- Using a grocery cost spreadsheet and knowledge of your usage habits, calculate the potential savings per year.
- If savings are greater than the standard membership fee (currently $60), then the membership fee is worth it.
You can use a similar strategy to, for example, do a Costco versus Sam’s Club comparison. If you’re not sure what Costco has to offer, there are many ways to shop at Costco without a membership, in order to aid your research.
And if all else fails, you can purchase a membership and give it a shot. There is no risk of loss, as the Costco membership refund policy states:
Risk-Free 100% Satisfaction Guarantee
On Membership: We will cancel and refund your membership fee at any time if you are dissatisfied.
Costco Membership Cost & Value Discussion:
- Is the standard Costco membership worth the cost to you? Why or why not?
- Is the Costco Executive membership upgrade worth the cost to you? Why or why not?
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My wife, newborn son, and I are currently making the move from the city to the ‘burbs. That move plus a mostly unused Citi Premier card that I wanted to “downgrade” to a no annual fee one (in this case, the Citi Costco one) led me to picking up a Costco membership just recently. I ended up opting for the executive membership since they offered the reimbursement. I know with other such credit card points scenarios (e.g. AMEX Blue Cash Preffered vs Everyday), my spend seems to always work out to right around the break-even point. So hopefully it will work out about the same (if not better) here.
Interesting that it was the card that led you to a membership. And worth noting that you do not need the membership to get the card.
I figured I’d get a Costco membership when I lived closer to one anyways. The credit card part just expedited it a bit. That said, I had no idea you could get that card without the membership. I was thinking having a Costco membership number was part of the application process.
A lot of stores have memberships come with a credit card, I would think that with the credit card membership it would just encourage one to shop there more frequently than any other store. I’m not at that place in life just yet but reading all this is helpful for a future decision making when I get there.
In my opinion, if you live close enough one for gas, it is a no brainer. My costco is always $0.25+/gallon cheaper than the surrounding gas stations. As both my wife and I pass it on our way to work, we do not even have to adjust our routes for a fill up. That in and of itself is worth the cost of membership for us. There are also deals on diapers and formula (the costco formula is rebranded similac) which are pretty solid. Yes, you can probably save some money if you are willing to closely follow ads or cut coupons, but on average, Costco is cheaper. Also, if your state allows stores to restrict liquor purchases to members only (some do, some dont), the deals are fantastic. I have seen savings of $25-30 on bottles of wine versus the grocery or liquor store and that is on name brand stuff (the Kirkland liquor isnt bad but not worth it for wine). As that is about the limit on what I will pay for a bottle of wine, absent a ridiculously special occasion, I much prefer getting a “$50 bottle” of wine for $25,
There is absolutely no reason to go for the executive membership because if you do not reach the $60 difference, they simply round up to $60. Its not something they openly tout, but I have received the bump up each year (including about 3 weeks ago).
In addition to Costco, I also had a BJs membership for a while. The difference is that BJs selection for items, especially baby stuff, is bigger so with the first kid who was temperamental with diapers, I could get any brand at BJs AND BJs accepts manufacturer’s coupons, in addition to their own monthly ones. With that combination, I could easily save over Target/Walmart/Amazon. As it is about 10 min farther than Costco, I do not have that any more since its just not needed as Costco has everything I was also getting at BJs.
I think you meant to say “no reason not to go for the Executive”. If you get refunded the difference, the only downside I see is having to burn the mental energy on it (maybe you forget), and then stop by the member services counter to initiate.
Know that in the State of Georgia, you do not need to be a member to utilize the Pharmacy for membership stores like Sam’s, Costco, etc.
At 27 years old, unmarried, and having the the closest Costco or Sam’s Club to me is over 30 minutes away, With my current lifestyle and budget I don’t think having an Executive Membership isn’t necessary with the cash back rewards. If I wanted it from the numbers here, I would spend the same amount of money that I use for groceries for a household just to break even here. I would stick to the standard membership and be just fine. I would say that the membership would be worth it for like a big family that shops a lot in bulk (and possibly owns a small convenience store) so that the member ship would be worth it. So as a saver, I will say it’s not worth it if you don’t have a monthly bill of over 500 bucks. I don’t spend no where near that much.
Great article breakdown on whether the cost of the executive membership is worth it. We have been executive members for over 3-4 years and it definitely is worth it for us. But we also live 8 mins away from Costco. You did remind me that we should really try to get our gas from there to save more money.
It is worth mentioning that there are some things that I found that are more expensive at Costco, and you need to consider if buying certain items in bulk is saving you money. For example, sometimes we buy in bulk and don’t use all of the product in time and it would have been cheaper going to Albertsons or Walmart.
I find the bulk basics (that do not go bad quickly) like toilet paper, paper towels, laundry detergent, ziploc bags, trash bags, creamer, vitamins/advil, razors, deodorant, Coffee, olive oil and nuts are always cheaper at costco. I think the clothing items can often be a bargain as well. I do not think the meat or most of the produce is worth the price in bulk on a regular basis, even though the quality is definitely there. I would buy it there if I had a big party to entertain for, but it’s just too much in general for my family of 3 to reasonably consume, even when I freeze it. One exception to the rule is bananas. At the San Diego Costcos, they are like $1.39 for a giant bunch, which is cheaper than even the cheapest supermarket in our area. Gas is definitely always cheaper, and the gift card area offers significant savings you can’t find in a normal grocery store. I have the gold star membership right now, but will be upgrading this year to the executive business one so I can write it off, and get credit for large items I’m purchasing for a new kitchen remodel.
I was surprised to learn that the Executive Card is only good for 2% on Costco purchases. I paid about $11,000 to an outside supplier for 2 A/C & furnaces but got only the 1%.
Greatly disappointed.
Jerry Lee is confused. He used his Citi Costco Visa card on the HVAC stuff and only got 1% back. The 1% reward is standard for all non-premium purchases made on that card *outside of Costco*.
The Costco executive membership rewards you 2% back only on purchases made *at Costco proper*, which the HVAC stuff wasn’t. If that furnace had been sold by Costco he actually would have gotten 4% back (2% for being an exec member and 2% for using the Citi Visa on Costco goods.)
I just used my Executive Membership coupon today…$260 worth of groceries for $88. No complaints here :)
So, if you don’t get your additional $60 back with the annual reward, do you have to ask for the refund?? Are they hoping you will forget that piece of it??
They kept trying to push that Executive Membership on me when I signed up and I kept having to say no. I’d be surprised if I spend more then $400 a year there so I knew I wouldn’t make the minimum purchase amount to get a rebate. Sure, they will reimburse you if you don’t make it but why give Costco $60 to basically hold for you for a whole year.
Can I get reward with the excecitive membership card when I charge with my visa
Bank of America ? Or I must use citi Costco credit card ?
You get 2% w/ the Costco card on Costco purchases, aside from executive. But you can use any Visa at Costco.
Is there a difference between the standard and executive memberships when booking travel, such as car rentals?
Also, the fine print says any amount made prior to your upgrade from gold to executive, will not be included in the annual calculation. Which sucks because that’s how they convinced me to upgrade this past Sunday, by showing me how much I’ve already spent this year and how I’m already close to the $3K so at a minimum it would be a wash. But now it looks like the $2,100 already spent wont even go towards the $3K minimum I’ll need to break even.
The only way two of us even come close to the $3000 in annual
Costco purchases to break even on the $60 up charge is if we purchase items for others and then get reimbursed. Take away those purchases and at most annual purchases come to less than a thousand. With purchases for in-laws and others we hit around three thousand, maybe thirty five hundred a year. Of course, should we buy a vacation through Costco that changes the math. Husband prefers we skip the executive membership and not do the shopping for others. I do the shopping, so he’s lost that one.
Does Costco gasoline expense added up on my yearly Costco total expense to get % reward? I buy Costco gas weekly and I only have a standard membership. Wondering if upgrading to Executive is worth it.
July, 2018, I bought an executive membership for 1 year with the promise of 2% cash return and a promise to make good on the $60 renewal if I didn’t make that much in rebates. In May, 2019 I received a check for $61. In June, I try to renew my membership. By June I was up about $30 in rebates from one time purchases that I don’t intend to repeat soon. So I determined I would apply my rebate check to a Gold (downgrade from Exec) membership as I didn’t anticipate spending as much the coming year. First they said my Gold would start immediately and I would not get the last month of the membership I bought in July 2018. So I lose a month of membership and rebates. Then they said I would get NONE of the $30 I had earned since the May check because you have to renew as an Exec Member to get the rebate. I said I’d come in July and renew so I didn’t lose the last month but figuring I’d get the rewards since my membership was up July 31. So on July 31, today, I renewed as a gold member. I was told I would not receive the rebate (now close to $40) since I was not renewing as an Exec member. So the benefits during the year I paid for were not to be paid unless I gave them another $60 cash (the rebate check plus $60 for Exec membership). To get the $40, I had to pay $60! (or at this point $120 in 2018 and $60 in 2019) This is not how it was presented when I bought the Exec member. Also I was not told, though I now read deep in the agreement that the reward is to be spent in Costco only. This is not a cash rebate. This is a scam…they should explain that to get your rebate earned during your bought and paid for membership year, you need to renew the Exec Membership for another year or lose the rebate. I never planned to do that. I am fairly certain I asked if I could change to gold if I didn’t want exec and was told yes–no mention of lost rebate. I was not told I had to spend the rebate at Costco. If you are going to do a hard sale like they do, they should explain completely! Today the store called corporate and somehow worked it so I could get the $40 rebate. I will think long and hard before renewing here. You are caught paying for Exec membership ($60) every year in order to claim the rewards you earn during the period for which you already paid. Moral: don’t get an Exec Member unless you intend to stay an Exec member if you earn a reward.
Actually you can get cash for your reward certificate, you just need to go to Costco. So I can get a “Cash Reward”
Costco membership is worth it for the benefits you can use besides shopping in the store. I’m talking about car rentals, car purchases, planning vacations, etc. When we rent cars through Costco, the price is $25-$30 a day less than using traditional car rental agencies. When you buy a car, Costco has negotiated prices with certain retailers and the cars cost less than the sticker price – Costco negotiates prices with the retailers! Costco is a very powerful company – what other company can say “Sorry, but we don’t accept Amex or MC!” As for in store purchases, we purchase the Kirkland dog food, pistachios, toilet paper, paper towels, smoked salmon and alcohol and clothes. Their sheet towels and beach towels are amazing too. Their prices can’t be beat anywhere and the quality is outstanding. Get the standard membership – it’s not worth the $120 unless you spend a lot at the store each time you go. We don’t. If you have some extra cash, buy Costco stock. It’s been doing well for a while now.
Your verbose explanations are confounding!
What do you mean by, ” Step 2: (when you become Costcvo executive member) disregard the Costco Credit Card Rewards”?
Please answer the question: does the touted 2% cash back of Executive Membership entail the elimination of the reward associated with Costco Citi Visa? When I become a Costco Executive Member, do I forgo the benefits — “4% cash back on gas, 3% on restaurants and travel, 2% back on all purchases at Costco and Costco.com, and 1% back on all other purchases”.?
Please keep answer brief with minimum advertising language.
Did you not read this: “Every Costco member gets the same cash back rewards if they have the Costco Visa – at Costco and elsewhere – regardless of their membership status.”?
The best way to save at Costco is to buy ONLY what you really need. Stick to the necessities and AVOID impulse buying. Double check your cart to make sure you’re not over-purchasing….if you only need a quart of milk, don’t buy 2 gallons.
If you have an Executive membership and spent less than $3000 this year, you’ve lost money….go to Customer Service and request a refund for the difference .
My biggest complaint with Costco is that they will not allow you view or track your rewards balance. What are my rewards to date???? It’s a mystery until the end of the year. That’s especially troublesome because not everything you buy at Costco are eligible for rewards. I spend $500 a month at Costco’s pharmacy….none of which applies towards my rewards balance.
If you have an online account associated with your card I beleive you can see your current reward balance.
You CAN track your rewards balance. All you have to do is log into Costco.com and go to your Account Details. The bottom right corner of the page will tell you your Estimated 2% Reward. It’s actually pretty accurate. Mine states $169.39 as of 11.6.19. Today is 11.7.19. Since the membership is $120 and I’m getting back at least $170, the upgraded membership makes sense for me!
I’m researching dental insurance and the small print says Exec members rate is $89 per year for our family vs the $237 per year I’m seeing with my regular membership. Has anyone upgraded their membership mid-year to take advantage of a HUGE savings like this?
Where do you see the details on this? (link)
December 2019, I purchased a new 2020 Chevy Traverse, thru a dealer ‘recognized’ by Costco. Totally did not realize that was a ‘thing!’ Because I am an executive member, and my purchase was an approved vehicle/dealer, and the sale was verified; I am getting a $700 Costco card! I’m happy with my membership. :’D If you have the gold membership, and other criteria are met; you get a $300 card. Just an aside, and not really pertinent to your report; but nice to know.
We have a lower level Gold Star membership. I second the comments of “michael” that the cheaper gasoline prices are worth the cost of any membership level. I thank you for the table showing the annual break-even point of doing $3000 a year in a Costco spend. It’s absolutely the case we are not averaging $250/month inside the store, so we will stay at just the Gold Star