Money Blue Book

As a long time apartment renter for many years, I’m finally on the verge on purchasing my very first home. As such, I’ve been super keen on tracking my credit reports and credit scores closely in recent months to boost my attributes as a prospective mortgage loan seeker. For a while now, I’ve been spending a tremendous amount of time learning everything I can about home mortgages and figuring out how to position myself to ultimately qualify for the very best rate on a home mortgage  loan. One of the most crucial pre-requisites I’ve discovered about interest rates for mortgages and personal loans in general – is the shear importance of having a clean credit report and a good credit score. Banks, credit unions, mortgage brokers, and even credit card issuers utilize credit reports and credit scores to ascertain the credit worthiness of loan applicants – mulling over everything from the number of timely on-time credit payments and the severity of late payments, to the age and number of active credit accounts. Such historical data is compiled and reviewed by the lender to determine the appropriate interest rate the lender must charge the loan applicant to compensate the lender for the level of credit risk that it must expend. Those applicants with banged up credit histories and low credit scores tend to get slapped with higher interest rate fees on their loan offers than those with stellar credit histories. Individuals who have decent credit reports with good credit scores to match almost invariably enjoy much greater access to the best mortgage rates and the best credit card offers than those without.

Credit scores are important because they are basically summary reflections of what’s found on your credit reports, and are one of the primary quick and easy short cut tools that lenders use to predict how likely you are to make your future credit payments on time. Thus the revealing nature of your numerical credit score has a direct impact on what type of mortgage loan rates, credit card offers, balance transfer deals, and auto insurance rates you can qualify for. Clearly, having a good credit score makes your financial life a lot easier and helps you save money in the form of lower interest charges whenever you need to apply for a loan or tap into credit based products.

The Definition Of A Good Credit Score Depends On What You Intend To Do With It

For starters, it’s important to understand that the importance of your credit score is relative and contingent on what you intend to with the score. Its utility also depends on which particular credit score you are talking about. While it’s always a great idea to monitor your routine credit score changes if you’re one of those like myself who occasionally depend on 0% balance transfer credit cards and balance transfer alternatives for emergency fund purposes, only if you’re planning on seeking credit or a loan within the next year would I recommend that you place so much immediate attention on your score. If you are not in the market at the present time for a mortgage or aren’t planning on applying for a P2P personal loan or credit card within the next 12 months, your credit score is certainly not something you ought to overly fuss over. While one’s credit score has far reaching effects beyond just loan applications and approvals (impacting prospects such as employment screenings and housing background checks), its primary purpose still revolves around its importance in helping you secure the very best interest rates and terms when you need access to immediate credit. If you’re thinking of getting a mortgage loan for example, knowing your credit score is important because it may let you know if you need to take immediate action to improve your score so that you can push yourself into a higher credit score tier and thereby increase your chances of qualifying for a lower interest rate on your loan application.

A Good Credit Score Also Depends On What Credit Scoring Formula and Range You’re Using

Other than the purpose of what you intend to use it for, another important factor of what constitutes a “good credit score” is also determined by what credit scoring methodology you are using. While all of the different credit scores out there are calculated by information contained in your credit reports, including payment history and ratio of actual credit usage to total available credit, the various scores out there differ in their numerical scoring ranges. Currently, the most popular and widely used scoring system is the FICO credit score formula (the myFICO.com score) developed by the Fair Isaac Corporation. Take a look at my article about FICO credit scores if you want a good background overview on how the scores are calculated and determined. FICO scores range from 300 to 850, with average FICO scores ranging between 680-700 depending on which of the 3 major credit bureaus’ data (Experian, Equifax, or TransUnion) you’re using. Presently in the United States, the median FICO credit score is 723.

While there is no current standardization on what exactly a good FICO credit score is, generally a good number is regarded as FICOs that are at least above average or above the median score (anything above 700). If your FICO score is at least 720 or higher, I would say that you are in pretty good shape as far as your credit rating goes in terms of your chances of securing top interest rates for your loan requests. In the past, most mortgage lenders and banks have traditionally lumped those with FICO credit scores of 720 or higher with those in the 800’s – deeming both groups to be very low default risk borrowers – equally qualified for the best interest rates.

Good Credit Score Standards Have Increased In Recent Years

However, one thing to bear in mind is that credit scoring standards have increased substantially during the last few years. Particularly as a result of the recent credit crisis and subprime mortgage debacle, lenders and creditors have grown more strict in what they demand out of borrowers for the lowest interest rate offers. The definition of what’s considered a good credit score has definitely gone up the last few years. Not too long ago in 2006 for example, a FICO credit score of around 620-650 would have been regarded as a “good credit score” and more than sufficient to qualify for the cheapest mortgage rates. Those days are long gone and lenders today now demand scores in excess of 750 or more for the top mortgage rates, along with high down payment percentages of 20% or more for home loans. While FICO credit scores of 720 or higher may still be regarded as the baseline standard of constitutes a good credit score, to truly snag the best interest rate offers, you’ll likely need premium FICO’s of 750 or higher.

The Effect Of Good FICO Credit Scores On Interest Rate Qualification

As noted above, the numerical range of what constitutes a good credit score is relative, and depends on what you want to do with it. Different types of lenders implement different credit scoring ranges in their categorization of prospective borrowers in terms of credit risk. Take a look at the two FICO score tables below (one for mortgages and the other for auto loans) to get an idea of how scoring ranges relate to the interest rates each range would generally command from lenders. As you’ll note, mortgage lenders tend to demand stricter FICO credit score standards than say – credit card issuers and even car loan lenders.

Example: 30 Year Fixed Mortgage Rates For A $300,000 Mortgage Loan

Looking at the above sample interest rates on a hypothetical $300,000 home mortgage application as provided by the myFICO.com website, it’s clear that the best interest rates on home loans are available to those with FICO scores in excess of 760 or greater. Of course, it’s also important to remember that such rates are rarely exclusively determined by FICO scores alone. Mortgage lenders also rely heavily on the applicant’s documentation of income sources and available assets when determining appropriate interest rates. Let’s look at auto loans:

Example: 36 Month Auto Loan Rates For A $25,000 Car Loan

As you’ll note from the table above, the best auto loan rates can generally be qualified by individuals with FICO credit scores in excess of 720 or greater. It’s an over simplification, but it sort of gives you a broad view of what constitutes a good credit score in terms of qualifying for the best rates.

If you don’t know where your official FICO credit score currently stands or what’s on your triple credit reports as compiled by the three major credit bureaus of Equifax, Experian, and TransUnion, I recommend finding out sooner than later. You might not need to tap into your credit rating at the present moment, but it’s always good to know where you roughly stand. Here are a few ways to get your FICO scores and credit reports for free.

• Free credit scores – via myFICO.com trial offers
• FICO discount codes – for credit score savings
• Free credit reports – obtained from the federal government’s official AnnualCreditReport.com website

As a big fan of the Citi Thank You rewards program offered by Citibank for its credit card customers, I thought I was pretty well honed on all of the user benefits and purchase rewards that Citi Card had to offer. However, there’s a relatively less publicized reward program that current Citi credit card and Citi debit Mastercard members are entitled to that many are not aware of. The reward program is called Citi Private Pass. The Citi PrivatePass program itself is totally free to existing Citi Card customers to the extent that there are no extra monthly membership fees required to join. The only participation cost to you is when you actually decide to purchase reward tickets to desired events via the Citi Private Pass program. The tickets feature heavily discounted prices (or sometimes are even provided free courtesy of Citi Private Pass), but oftentimes you’ll still have to pay a small portion out of pocket .

Unlike Citibank’s well known and popular Citi Thank You purchase incentive feature, which tends to focus on more tangible gift card and cash based rewards that you can accrue through daily card purchases, the Citi PrivatePass program is devoted almost exclusively to entertainment and experience based offers – providing its participants special access to free and cheap tickets to unique concerts, dining experiences, and popular sporting events. The Citi Private Pass program is not a separate card, but rather a rewards program already available to existing Citi Card customers.

Citi Private Pass Offers Free and Cheap Tickets For Special Live Events and Experiences

After reviewing the Citi Private Pass website and examining some of the promotional material, it’s clear the motivation behind the Citi Private Pass program is to help Citibank capture a greater segment of the entertainment generation, an emerging and outgoing demographic that’s willing to go out and spend money but still harbor the savvy mindset to locate the best online deals for discounts, limited time offers, and freebies. Presumably hoping to re-brand itself into some sort of entertainment conduit or facilitator for card carrying customers who are also experience seekers, the Citi Private Pass program offers Citi customers the opportunity to enjoy special VIP access to sought after events at deep discount prices that are much lower than that typically sold to the general public.

According to the folks at CitiCard, the Private Pass program offers card members a way to get access to limited pre sale tickets, obtain preferred seating reservations ahead of time, arrange meetings with their favorite musical artists, or even attend special limited opportunity movie screenings and cultural events. Reviewing the Private Pass terms and conditions and examining the entire selection of offers available to customers, I can see why the program has appeal on a diverse scale. Members can select from a very wide variety of trips and event categories – including golf, restaurants, nightclubs, shopping, sporting events, theater, and other popular activities.

The Citi Private Pass program breaks the program down into several broad experience categories, each with its own individual selections. Currently, Private Pass is touting several popular summer programs, and such seasonal programs are constantly being rolled out.

• Tickets To Music Concerts: Citibank and Live Nation are promoting discounted lawn concert tours for just $5 per ticket through the Summer of Savings event for the months of July and August 2009. Discounted concert tickets are available for a wide array of well known artists and bands such as Lil Wayne, Aerosmith, Creed, Kid Rock Depeche Mode, Nickleback, Blink-182, and even the Jonas Brothers (gag). Just go to www.citiprivatepass.com to get the special access code that allows you to take advantage of this offer.
• Tickets To Popular Sporting Events: Special exclusive discount savings for sporting experiences are available – everything from ordinary events like basketball and baseball games, to the more out of the norm – including fly fishing, river sailing, and rodeos.
• Access To Special Movie Viewings and Special Art Galleries: Many of the featured offers in this category are not available to the general public and are only available to CitiCard customers. A few of the more exclusive offers are only available to Citi Visa Signature cardholders.

If you are one who loves going out and spending money on experiences and memories rather than on mere materialistic objects that inevitably depreciate, then I think the Citi Private Pass offerings and special ticket discounts are something your lifestyle may demand. At the very least, the Citi Private Pass program is a rather interesting way to get to know what live events are happening out there if you’ve been wanting to participate in one. Simply visit the Citi Private Pass website directly and access the free and discounted selections from the entertainment category of your choice.

Remember, to participate in the free Citi Private Pass rewards program, you’ll need to be a current Citibank credit card or debit card customer. If you’re not yet a Citi cardmember and would like more information about becoming one, check out some of these popular Citi Card offers:

• Citi Platinum Select Master Card – 0 % APR on balance transfers and purchases for 6 months.
• Citi Forward Card – 5% purchase reward back for restaurants, books, movies, music, and 1% for everything else.
• Citi Premier Pass Elite Card – 2% reward points for all everyday purchases at gas stations, supermarkets, transportation lots, and parking facilities.
• Citi Forward Card for Students – 5% purchase reward back for student purchases like eating out, books, movies, and music.
• Citi mtvU Platinum Select Visa Card for Students – 5% rebate reward back for dining out, music, movies, and books, including purchases made at Amazon.com.

As the economic paddy wagon continues to hee and haw its way through the recessionary mud, once available avenues of emergency funds are steadily drying up. Credit card consumers and account holders across the nation may have noticed that they are receiving fewer credit card junk mail in their mailboxes these days. While this reduction in the volume of paper junk mail received may be counted as a blessing, it’s also a sign that the once bountiful availability of lucrative 0% APR credit card offers are slowly coming to an untimely end. Due to the deterioration of the mortgage and credit industries, major credit card issuers such as Citi Card, Chase, Bank of America, American Express, and Discover have significantly pulled back their credit card marketing efforts and drastically reduced the quantity and quality of introductory 0% balance transfers offered.

Currently, the most popular 0% balance transfer card offers that still remain in effect today include the following short list of active promotions. As always, before applying for a balance transfer card, it’s important to read the fine print carefully and be fully cognizant of the advertised 0% rate duration, the availability of any balance transfer fees, the regular interest rate after the end of the 0% period, and the availability of any underlying cash back or credit card reward offers.

• Discover More Card: 0% balance transfer for 6 months, 3% transfer fee. Get cash back on up to 5% on select purchases and earn 1% back on everything else.
• Citi Platinum Select Master Card: 0% balance transfer and purchases for 6 months, 3% transfer fee.
• Miles by Discover Card: 0% balance transfer for 6 months, 3% transfer fee. Earn bonus airline mileage rewards with this travel credit card.
• Chase Slate Card With Blueprint – 0% balance transfers and 0% purchases for up to 12 months, with a one time transfer fee of 3%.

Disappearing Balance Transfer Credit Card Offers Due To Changing Times

In response to the market trend of vanishing balance transfer deals and low interest credit card offers, it certainly doesn’t help that we currently have an anti big business leader at the helm in President Barack Obama. With the passage and issuance of new credit card rules and more aggressive federal regulations designed to crack down on the more unethical credit card issuance practices, the new rules are now making the business practice of providing 0% APR durations extremely unprofitable for the major credit card issuers – and threatening to push the remaining 0% balance transfer offers to the brink of extinction.

During the glorious heydays of credit card arbitrage and App-O-Rama’s, it was easy for most Americans to count on the availability of 0% balance transfers for cheap personal loans and low interest debt consolidations. Only a mere few years ago, those saddled with a mountain of high interest credit card debt could simply leverage their good FICO credit scores and apply for new credit cards that offered 0% balance transfer promotions as a short term way to consolidate their oppressive debt into a zero percent account for 12 months or more while they slowly chipped away at the payment principle. If after the conclusion of the one year duration the consumer needed to extend the 0% balance transfer consolidation period, the cardholder could simply seek out another interest free credit card and transfer the unpaid balance over to the new zero percent account.

Now, those days are all but gone as credit card issuers have had to drastically cut back on their offerings to comport with economic realities and standards brought on by new, tougher governmental rules on lending practices. Back during my earlier student days, I was one of those individuals who actively used balance transfer credit cards to keep my personal budgets afloat. Now, if I were to ever encounter the same cash strapped conditions again, I would have to resort to using balance transfer consolidation terms that aren’t as favorable as they once were, or seek out alternatives to credit cards altogether. Major balance transfer issuers that once dangled lucrative free balance transfer promotions of 12-18 months, with no balance transfer fees or fees capped at $75 or $99, with some that even offered attractively cheap lifetime balance transfer terms – are now witnessing the complete pull back of these former offers. Today, while a handful of low interest 12 month 0% balance transfer promotions remain, most card issuers now require some upfront balance transfer fees, have shorted 0% credit card transfer rate durations to an average of 6 months, and have pretty much withdrawn most of the sign up incentives that used to exist just a few years ago.

Those like myself who have grown dependent on 0% balance transfers and low interest credit cards as sources of emergency funds need to start bracing ourselves and preparing for the slowdown effects of credit card consolidation loans (for those who have not already done so). With national unemployment rates almost certainly to exceed 10% and banks and lenders still fumbling with the credit crisis, it’s important to figure out contingency options in case of unexpected personal finance emergencies. Those who are currently relying on balance transfers to help pay down high interest credit card debt also need to know what other balance transfer alternatives are out there. You never know when you or your family may encounter a sudden reduction in income stemming from an out of the blue layoff or unexpected illness on the part of the head bread winner. We are currently in difficult times – it’s best to stay prepared.

As always, maintaining a good credit score is essential to keeping that dwindling balance transfer pipeline open. Securing a high FICO credit score is also highly relevant to the accessibility of the litany of balance transfer alternatives out there as well. If you make it a habit of making late payments or neglecting your existing debt account obligations, your credit report history will suffer – closing the door on the secondary loan consolidation options that may have been available to you.

List Of Credit Card Loan Consolidation and Balance Transfer Alternatives

If your attempt to take advantage of available 0% balance transfer offers or negotiate lower interest rate terms with your current credit card company have failed, you may wish to consider these plausible loan consolidation alternatives.

1) Introductory 0% Credit Card Balance Transfers: Obviously, before finding alternative loan solutions, the first step is to make sure and confirm that you’ve truly exhausted the list of available balance transfer offers to you. If used diligently with timely and proper adherence to minimum payment rules, zero percent credit cards are the easiest available method to consolidate high interest debt. Some of the issuers even provide balance transfer consolidation checks that can be used to directly pay off non credit card debt as well.

2) Lifetime Balance Transfer Credit Cards: In the old glory days of balance transfers, there were such things as lifetime 0% balance transfers. Obviously those days have past. Nowadays, the zero percent lifetime balance transfers have been replaced with low interest life-of-the-loan type deals. For card customers trying to pay off high interest credit card debt, these new lifetime low interest balance transfers may be substantially cheaper than the other personal loan alternatives out there. Some issuers like Discover Card have been recently offering lifetime balance transfer rates as low as 0.99% APR to 2.99% APR. Of course, while lifetime balance transfer credit card rates may be cheaper than other personal loan alternatives, they do require the card account holder to exercise super diligent repayment habits to continuously benefit from the perpetually low rates. Failure to do so will result in a figurative whack over the head by the issuer in the form of substantially higher rates and penalty fees.

3) Lending Club – And Other Popular Peer To Peer Online Personal Loans: For those with less than stellar FICO credit scores or credit reporting histories, online peer to peer lending services have emerged as viable balance transfer and personal loan alternatives to traditional banks. The leaders in this new and emerging industry are presently Lending Club.com (see my Lending Club review for more of my personal insight into the company’s operations) and Prosper.com. Peer to peer services like Lending Club (or P2P lending as it’s commonly known), offer a way for ordinary Americans to lend to their fellow man and woman by way of an online matching system – complete with personal profiles and blog messages written by prospective borrowers. By making use of credit scores, credit reports, debt usage ratios, and income & asset verification details, services like Lending Club allow prospective ordinary lenders like you and I to determine the risk level for the loans they extend and the appropriate interest rate compensation for that risk. Presently, Lending Club loan rates for prospective borrowers start as low as 7.88% for those with at least a qualifying FICO score of 660.

4) Secured Credit Card Debt Consolidation Via Home Equity Lines of Credit: In many state jurisdictions, those who own their own homes can open up a home equity line of credit (a HELOC loan) via a bank, and use the built up equity to pay off and consolidate their existing credit card debt. In almost all cases, a HELOC loan offers a much lower interest rate than most personal loans via banks or ordinary non-promotional credit card offers. However, this option is a very controversial alternative to credit card balance transfers as it basically entails the legal shifting of unsecured personal credit card debt – and turning it into a debt that is now secured by one’s home. This distinction is important, because ordinarily in the event of a failure to pay back the credit card loan (a credit card default), the card issuer can not immediately go after your home to satisfy the unpaid debt. But once the debt consolidation is made via a HELOC loan, this turns the unsecured credit card debt into one that is secured by a condominium or single family home, subjecting the home to possible seizure for non payment. Utilizing a home equity line of credit loan for short term credit card relief is rarely a good idea, but it’s an option and balance transfer alternative nonetheless.

5) Personal Loans Via Banks and Local Credit Unions: Those with good to excellent FICO credit scores may be able to apply and get approved for a personal loan from their local bank or community credit union. However, bear in mind that while these type of loans for credit card consolidation purposes are generally widely available to most borrowers, they frequently demand interest rates that are higher than available home equity line of credit solutions. Furthermore, oftentimes before banks or credit unions will extended such personal loans for existing credit card debt consolidation reasons, they frequently require the borrower to close out his or her existing credit card accounts to ensure that further debt is not accrued.

6) Debt Consolidation Counseling: If your credit score or credit report history is simply too damaged to utilize the available low interest credit card debt consolidation alternatives above, you may be able to seek out affordable credit counseling services from accredited non profit organizations to help you consolidate your existing debt in a manageable way via fee waivers and lifestyle changes. Many colleges, universities, military bases, veteran organizations, community credit unions, and even local government consumer protection authorities operate such non profit credit counseling programs. Of course, keep in mind – just because an organization touts itself as “non-profit”, there’s no clear cut guarantee that the services are free, affordable, or even legitimate.  Beware of hidden fees or suspiciously high up front charges by the so-called non profit credit and debt counseling services. Those looking for a list of credit counseling agencies provided by the U.S. Department of Justice for various state jurisdictions may want to check out this approved agency list. It’s a good starting point for those who need debt repayment help.

7) Payday Loans (Or Car Title Loans): This balance transfer alternative is the most controversial of all. I only offer it up here because it is a potential option for those seeking an alternative to credit cards, albeit an extremely costly one. Payday loans or cash advance loans provide people with a quick infusion of cash when all other immediate options have failed. Car title loans are simply payday loans that are secured by your car, subjecting your vehicle to possible seizure if you fail to pay back the loan. For those with poor or damaged credit scores, payday loans are frequently the only loan options available. With nothing more than a verified pay stub and a job, borrowers can secure a quick personal loan to pay off emergency bills such as home utility charges, car repair fees, or even credit card bills. Unfortunately, the easy accessibility of payday loans and the lack of any substantial credit history documentation needed to get approved also explains why they are so incredibly distasteful. Payday cash advance loans frequently charge the highest and most outrageous fees of any type of loan out there. I highly advise readers to stay away from high interest payday loans if possible. If you absolutely must play with fire, only borrow as much as you can afford and pay the loan back as soon as possible without delay.

For many years now, I’ve been a loyal Costco warehouse club member. In my earlier days, I signed up for Costco’s entry level Gold Star membership program at what’s now $50 a year – applying for the co-branded Costco American Express True Earnings credit card in the process for the extra 1% cash back rebate on all club purchases. Over the years, there have been a few instances when I seriously considered discontinuing my membership due to lingering complaints and gripes about overcrowding and inadequate parking facilities at my local Costco locations. But ultimately, the accessibility headaches were not significant enough to outweigh my love for the affordability and bulk conveniences of warehouse style shopping. For now at least, I plan to continue paying my annual Costco membership fee.

Despite my occasional self musings of “is Costco membership worth the annual fee?” – overall, I have to say it is. Despite the inevitable problems associated with visiting such a popular and heavily frequented destination for hordes of bargain hunters and bulk shoppers, when you go to Costco you know the product prices will be competitive, the return policies will be ultra-liberal, and the customer service will be top notch. And no, this is not a sales pitch. I’ve visited other warehouse stores like BJ’s Wholesale and Sam’s Club – however, none of them can quite measure up to the overall offerings of Costco in my opinion.

Is Costco Executive Membership Worth The Higher Annual Fee?

A few years ago, I finally upgraded my Costco membership level to premium black card status – signing up for the higher priced Costco Executive Membership. Despite the higher annual fee for Executive Membership ($100) versus the cheaper basic Gold Star membership ($50), because of the higher reward features and extra conveniences offered by the higher membership tier, it actually makes more financial sense to go premium. Yes, Executive Membership costs an extra $50 per year, but the program offers a feature not available to ordinary white card members – a coveted 2% cash back reward rate on all Costco purchases. So long as you are able to  spend $2,500 or more in a year at Costco stores (or at least $200 or so every month), the premium membership pays for itself in the long run. Spending at least $2,500 per year will net you at least a $50 rebate check that ultimately pays for the additional cost of VIP membership.

Costco Executive Members also receive additional warehouse benefits and greater discounts on Costco services. While all current Costco members already enjoy discounted rates on services for home, automobile, health, and dental insurance, not to mention discounted savings on subsidized credit and identity theft prevention services, Executive Membership provides for even better deals and offers. The more notable perks include lower prices on check printing, extra savings on payroll services and identity protection, exclusive sign up bonuses for money market and online investing accounts, free roadside assistance for vehicles covered through Costco’s auto insurance program, and special benefits on travel packages. Here are some of the offer details for Costco Executive Membership participants:

• Up to 20% off auto and home insurance premiums via Ameriprise,
• Free roadside assistance for Costco covered vehicles, and home lockout assistance for covered homes,
• $60 sign up bonus for new Capital One bank accounts, and
• $60 sign up bonus for new ShareBuilder investment accounts with 25% quarterly rebated savings on qualifying transaction charges.

To figure out if it makes sense for you to upgrade to Executive Member level, ask yourself this question – do you spend more than $200 every month at Costco locations? While college students and single individuals who only occasionally buy bread or milk a few times a year from Costco stores may find it more difficult to hit the $200 monthly spending mark, young couples and families with children who spend extra sums on bulk packages of meat, paper towels, and/or baby products should easily be able to meet that amount with little effort. Additionally, if you are ever in the market to make a big ticket purchase (sofa, notebook computer, or new LCD TV), it might be worth it to upgrade since the Executive Member 2% cash back savings will instantly pay for the additional cost of membership.

Of course, what you really ought to try to do is earn at least $100 a year in rebates (via $5,000 total spending per year, or $417 a month) so that what way, your entire Costco membership can be obtained for free, rather than just a reimbursement of the additional Executive Membership portion. With the 2% rebate rate that the Executive Member program offers, this feat is definitely more accomplish-able, especially for heavy spenders.

Costco Executive Membership’s Refund Policy Is Satisfaction Guaranteed

If you’re still on the fence and wary of forking over the additional $50 fee for the higher membership level, Costco’s stated 100% satisfaction guaranteed and refund policy should easily sway you. The company explicitly indicates on its website and at its stores that they will refund your membership fee in full at any time if you are dissatisfied with your experience or results.

For example, let’s say that after you upgrade to Executive Membership, you discover that you shop at Costco less than you initially thought, and ultimately fail to meet the break even threshold of $2,500 a year (the point at which the 2% cash back Executive level rebates pay for the extra cost of membership itself). Hypothetically, let’s assume you only spent about $1,500 at Costco for that first year and racked up only $30 in Costco purchase rebates. By walking up to the customer service desk and demanding satisfaction due to the fact you weren’t able to profit from the Executive Membership, Costco will refund you back the difference of $20. While this refund policy is not expressly stated in such terms anywhere on the website or at Costco stores, this policy has been confirmed and verified as official and pursuant to the company’s satisfaction guaranteed policy for premium membership. Frankly, I can’t think of any real reason not to upgrade to the Executive Membership, other than your preference to reap some minimal interest income from the $50 you might earn if the funds were kept in a high yield savings account or CD deposit.

Ultimately, Executive Membership is a win-win proposition for both you the customer and Costco. You get the benefit of a risk free cash back rebate program and Costco acquires a new customer who’s eager to potentially spend more to take full advantage of the higher 2% reward rate on every dollar spent at Costco warehouse locations.

Even Without The Executive Membership Upgrade, Current Costco Members Can Still Earn 1% Cash Back On All Costco Purchases

Regardless of whether you are an Executive Member or not, if you are an existing Costco member or even a first timer who is contemplating signing up for basic Costco membership, you are eligible to earn 3% back on already heavily discounted Costco gas and 1% cash back on all of your other Costco purchases with the Costco TrueEarnings Card from American Express. Once properly linked to your Costco account, your American Express True Earnings credit card serves as your 2 in 1 membership card – with your account information and photo displayed on the back of the card for your convenience. The co-branded Costco Amex card (which waives the annual fee with a paid Costco membership) features the following attractive purchase reward structure:

• TrueEarnings Card From Costco and American Express: Unlimited cash back for the following purchases – 3% for gasoline, 3% for restaurants, 2% for travel, and 1% back for everything else, including purchases made at Costco stores.