Costco Executive Membership: Is It Worth It?
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.
July 5th, 2009 at 9:41 pm
Considering that most AmEx cards already give you 1% cash back/reward, the value added of this membership is 1%. If your goal of this card is to recoop your membership fee, black card members need to spend over $5,000 while white card members also need to spend over $5,000. So, it’s probably worth it to uprade if you spend over $5,000 a year. If it’s less than that, you’re better off with the white card. Also, there are a few cards that will give you 2% cash back (Am Ex Fidelity and Charles Schwab). Given that I’m don’t have a family, it’s probably still more economical for me to stay with the basic gold membership.
July 6th, 2009 at 12:43 am
Costco membership (whether the white card or the Executive Membership black card) is a rip off if you wouldn’t ordinarily shop in bulk otherwise. It doesn’t make sense for every single person out there to shop at Costco or other Walmart style warehouses…even for the extra cost per unit savings. It only makes financial sense to pay for a Costco membership if you shop a lot or highly prefer to stock the cabinets in advance.
I’m currently a graduating college student. I prefer the location convenience of grocery shopping at my local supermarket rather than drive out of my way to find a Costco store (which are not always located in easily accessible places). Besides, as a student, I don’t have much of a need to buy products in massive bulk anyway.
July 6th, 2009 at 4:17 pm
With a hubby and 2 very young children (with another on the way) at home, I love my Costco membership. I too started out with the goldstar package and eventually got talked into by my upselling Costco customer service rep into upgrading for the executive membership plan. Costco keeps track of all of your membership spending habits and lets you know when you are renewing your plan whether it makes sense for you to upgrade.
The executive plan is an additional $50 more than the already $50 entry level plan, but I think the 2% reward on all Costco purchases is worth it. I know based on the amounts of money I spend on baby formula, diapers, and baby wipes alone – the savings are definitely worth the money. I haven’t tried out the other executive level benefits, but I hear they are pretty good
July 9th, 2009 at 6:41 am
Very insightful article. Is Costco really a money-saving option? That is still up for debate.
July 10th, 2009 at 1:23 am
I think the premium membership is worth of money. Let’s say if you buy 4 set of tires, 1 laptop or desktop, that costs almost covers the difference.
July 15th, 2009 at 10:57 am
This card deal is like a lot of others and the answer most likely is: it depends. The cards with the fees usually depend on how often you use them. E.G. if you have an american express blue card, it’s fantastic once you are over the $6,500 point barrier, but before that a lot of other cards are better.
I’m of the opinion that it is usually better if you can juggle multiple cards – Use a Citi Forward card for 5% back on Dining, Movies, Music, Books & games. Use a Chase Rewards or Discover card for 5% back on Gas. Use a Chase rewards or other comparable card for 5% back on supermarkets and drugstores. Then customize a capital one card for 3 miles back on travel. It gets complicated, but you can usually maximize your points that way.
July 21st, 2009 at 7:46 pm
I thought it would be useful to see if we really did save money with our Costco executive membership. Surprisingly most of our savings wasn’t from our food purchases. We saved half on our car insurance.
I have noticed that Costco’s gasoline has been 12-15 cents cheaper a gallon then other gas stations around my area.
July 25th, 2009 at 12:55 pm
If you are a single person or a young couple, consider goin halfers with another couple or someone you know who may be interested. You can get good deals, split the cost and save money that way!
July 29th, 2009 at 8:04 pm
At my costco the head memberships offered to refund the difference. So if you only get 30 bucks rebate he will refund you an additional 20 so it only costs you 50 no matter what. But, you can easily get the limit if you know a few friends or college buddies who want to buy a new TV or computer my gf racked up 900 for me when she bought a new laptop…lol
September 9th, 2009 at 8:39 pm
I gave up my membership (the $50 Gold Membership) primarily because I like to go to these bunker-shopping stores when they open, so I can get in and get out. When I arrived at 10:00 a.m. which is the stated opening time, I was told that I had to wait til 11:00 a.m. because the earlier opening time was for executive membership only (it would’ve been nice if it had been posted on their website). Given the location of this particular Costo (Marina del Rey) and how bottlenecked the traffic becomes as the day proceeds, I dropped my membership. I refuse to pay an additional $50 in order to be able to shop an hour earlier. Now I go to Smart & Final which is Costco for single people. Elitism doesn’t always work in the vendor’s favor.
September 18th, 2009 at 12:13 pm
If you are a gold member executive membership is a win-win. If you do not get $50 back in savings in a given year. Take the check to customer service and they will give you the difference and downgrade you to gold. You can then re-up for executive. Since there is no downside (except savings account the interest on the $50), you might as well get all the executive benefits.
November 14th, 2009 at 4:25 pm
Okay then but is the executive card worth investing in or not. Yes I shop maybe 20 times year but could tell you how much I spend. Well I guess stick with what I have and enjoy it I guess.
November 14th, 2009 at 5:35 pm
The Costco executive membership and even the regular Costco membership fee is worth it. With executive you get your money back if you’re dissatisfied for any reason. I highly recommend getting the American Express Costco credit card to get your membership fee waived. Plus you get some nice cashback with your Costco purchases. If you live close to a Costco location and can get your gas, tires, and everything else from there, it’s a win win! I’ve been doing it for years
February 10th, 2010 at 3:20 pm
I agree with Tifa. Being single, the Costco membership doesn’t yield the savings that it would for a family of 4. You just don’t really benefit from stockpiling enormous sizes of the same items. However, my friend who is married with kids has a family and saves tons using her Costco card. She told me I can go with her any time to purchase items. So, I just use her membership when necessary.
February 17th, 2010 at 4:00 pm
The Costco Executive level membership saves me a ton of money with our auto and home owners insurance. I have tried shopping for quotes with other companies and no other companies can come close to the great price with great coverage amounts through the Costco/Ameriprise insurance program. Otherwise, I don’t spend enough on food to reap the amazing 2% annual rebate check.
February 25th, 2010 at 4:12 pm
If the executive membership is such a great deal for the member, why do Costco employees push the darn thing so hard? I can’t believe that Costco is dying to give me some of my money back. I have heard that not everything is eligible for a rebate, including some large ticket items
like jewelry and tires, but there is not a speck of information about what is eligible and what is not. I have had costco people tell me on two consequtive days that I would get 400.00 then
500.00 back per year. No one can ever give you specifics. When I have declined I even had
one employee tell me I was stupid. I just can’t believe that if it was for my benefit they would be pushing it so hard, and they would have all the conditions and items not eligible printed out in black and white.
March 6th, 2010 at 8:20 pm
To VALERIE:
The executive membership is 100% guaranteed… meaning if your check is less than what you pay to upgrade we will refund the difference at the membership desk***.
If the Costco employee told you estimated return was around 400-500 you really should try it… besides what do you have to lose.
There are only few major exclusions, none of which are jewelry or tires. The main ones ARE gas and tobacco alond with stamp purchases and a few other minor ones like cash card purchases…..
Basically the idea is that your purchases would start to pay for your membership, rather than you pay it entirely out of pocket. You shop so much that Costco wants to keep you coming back… and maybe even come more with the incentive of cash back. It sounds like if you were to upgrade you would no longer need to pay for your membership every year, cuz your purchases would make you more than that back with the Executive Rewards check.
March 9th, 2010 at 3:42 pm
Valerie is right, and I don’t understand why the person replying to her comment doesn’t specifically spell out exactly what is excluded from the 2% rebate. The comment “a few other MINOR” items neither clarifies nor adds to the discussion. I was once told that gas, tobacco, liquors and sales taxes are exclude. Why not be fully honest and specifically state all those items that are excluded from the rebate? Then customers could make an informed decision if they want to invest the extra money. Finally, a “policy” of giving up back the difference between your rebate and the extra “executive” fee is not legally binding to the store and there is no requirement for the store to honor this policy. I too have always wondered how Costco can afford to have all of those people running around with scanners declaring to everyone in a hundred foot radius that you spend a lot of money at Costco and would benefit from Executive membership. I guess Costco is so eager to lose money because they make in up on volume. Got any used cars?