Personal Finance

The One Number You Need to Know When Deciding if a Costco Executive Membership Is Right for You

A woman sitting in her living room with a calculator, notebook, and laptop on the coffee table.

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It’s actually pretty easy math.

Key points

  • A Costco executive membership costs twice what a regular membership costs.
  • It also puts cash in your pocket that could make that higher fee worth paying.
  • If you spend at least $3,000 per year at Costco, an executive membership will pay off for you.

When I first started shopping at Costco, I had a basic membership that worked well for me. At the time, I was married but didn’t have kids, so buying groceries in bulk didn’t make that much sense for me.

But once I had kids and my grocery bills started climbing, I ran the numbers and realized it made sense to upgrade to an executive membership at Costco. And if you’re on the fence about whether to upgrade or not, there’s really only one simple question you need to ask yourself.

Do you spend more than $3,000 a year at Costco?

Right now, a basic Costco membership costs $60 a year, while an executive membership costs $120. But one thing an executive membership gives you that a regular one doesn’t is cash back on your purchases, similar to how you might score cash back by swiping a credit card.

The rate of cash back you’ll get on Costco purchases via your executive membership is 2%. So basically, to see if an executive membership makes sense, all you need to do is comb through your credit card statements from the past year and see how much you’ve spent at Costco.

If your total is $3,000, you’ll break even by paying an extra $60 to score $60 in cash back via your executive membership. But once you spend even a dollar more than $3,000, your executive membership pays off.

Granted, you don’t just want to look at your previous Costco spending. You should also try to anticipate what your upcoming spending will look like.

Let’s say you spent $4,500 at Costco last year, but $2,000 of that was to upgrade electronics in your house. That’s probably not something you do every year. So when assessing your spending, it’s important to not just look at the total number, but also, the specific things you bought.

Also, if your living situation is changing in the coming year, then you may not want to upgrade to an executive membership. Let’s say you spent $3,500 on groceries and essentials this past year, only now your oldest child is moving out and won’t be living at home any longer. That could shrink your Costco spending a lot and make an executive membership less cost-effective.

A simple decision

For me, keeping an executive membership is an easy decision. But I also know I spend roughly $100 a week at Costco because I regularly buy groceries and household products there.

If you’re on the fence about getting an executive membership, you may want to take the leap and see how things play out if money isn’t particularly tight. All told, upgrading your membership isn’t a huge risk. You might spend $60 to upgrade only to get $45 back.

I’m certainly not an advocate of throwing money away. But in this example, you’re talking about losing $15 — not a life-changing sum.

So all told, if you’re inclined to get an executive membership, it could pay to go for it, especially while living costs are up due to inflation. And if it doesn’t work out, you’re not stuck. You can always downgrade to a basic membership once the time comes to renew.

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