Costco Executive Membership: Is It Worth It?

Published 7/4/09 (Modified 8/19/12)
By MoneyBlueBook

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 TrueEarnings® Card from Costco and American Express 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.

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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% for annual gasoline purchase of up to $4,000 (1% thereafter) on already heavily discounted Costco gas and 1% cash back on all of your other Costco purchases with the TrueEarnings® Card from Costco and 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: Cash back for the following purchases - 3% for annual gasoline purchases of up to $4,000 (1% thereafter), 2% for restaurants, 2% for travel, and 1% back for everything else, including purchases made at Costco stores.

This entry was posted on 7/4/09 (Modified on 8/19/12) and is filed under Deals and Offers , Frugal Living . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response.

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45 Responses to “Costco Executive Membership | Costco Membership Fee | Money Blue Book”

SurlyTrader says:
July 15, 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.
Laura says:
July 21, 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.
Stephanie says:
July 25, 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!
Chop Sui says:
July 29, 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
Barbara says:
September 9, 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.
Dave says:
September 18, 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.
Big Papa says:
November 14, 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.
Sarah says:
November 14, 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
Denise says:
February 17, 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.
KarmicKreator says:
March 16, 2010 at 12:49 am
To Jack:
I didnt list all specifics because they are listed in our membership brochure that you can pick up at ANY warehouse. Here's a prime example of why I didnt list ALL situations... By some state laws we cannot give the rebate on alcohol, in others we can.

If you really want to know just ask at the membership desk for a service directory and flip to the back where all the company policies are laid out clearly for you. And yes the refund on memberships is also spelled out there as well.

As for shouting how much you spend, I sure hope they are being discete with the personal information... my warehouse has no tolerance for anything less. If you've been approached, in all likelihood, you would have already made money. We approach those it would benefit... aka who spend enough to warrant the additional cost of upgrading.

Hope this helps.....
DigitalEye says:
March 22, 2010 at 12:25 am
I recently switched to Exec membership at Costco. I figure we'd try it for a year and see how it worked. Generally we spend enough to get about $75-$100 back so we'll see. We buy a LOT more than food at Costco. Wine, booze, motor oil, books, electronics, vitamins even contact lenses. Don't want to sound like a shill but there's a lot more than food at Costco and at much better prices. On the downside , I agree that Costco doesn't make it clear what "qualifying" purchases are. I've looked all over their site and found little definitive info on this. In fact, that's how I found this blog!! Searching for "what is a qualifying costco executive membership purchase". At least I now know that gas and tobacco don't count but I don't know about liquor here in CA. Oh well.Thanks
KarmicKreator says:
March 22, 2010 at 3:56 pm
Ok so it sounds like many need to here the specifics on what does not counttowards the 2% exec reward... as I said earlier just grab a member benefits and costco sevices brochure at membership.

For those who dont have the time to do that, here we go...

Things that DONT count:
*Cigarettes/tobacco related products
*Gasoline
*Costco cash cards
*Postage stamps
*Alcoholic beverages in following states
--------------------->Alabama, Georgia, Kentucky, Ohio, and Michigan
*Food court purchases
*Membership fees
*Misc fees, depsotis and taxes including sales tax
*Purchases not recorded through Costcos front end registers and transactions done on or through Web sites not hosted by Costcoeven if accessed through Costco.com, including all business, consumer, and insurance services, the online photo center, Costco Travel, and the My Publisher web site.
*This can change without notice at Costcos discretion

There ya go... its all spelled out and really those purchases dont make a huge impact on an average member... unless you are a cigarette smoking maniac who loves to take pictures while eating at the food court for every meal... who then goes home to write a few hundred letters to send out using your postage stamps... these exclusions wont really affect your bottom line reward.
Have fun
Steve says:
May 15, 2010 at 8:21 pm
Karmic,

I think you erred in lumping gasoline in with the other items that do not qualify to earn the 2% cash back. I probably spend about $100/month on gas at costco, and based on the always-4-deep-at-every-pump lines I see there, it's a big slice of the costco pie for many others as well.

If you really want to save money, order costco cash cards online with a high cash-back credit card (visa/mc is accepted @costco.com) and use that to pay for items in-store with or without a membership. Boom, savings.

-Steve
Stauschua says:
June 1, 2010 at 6:20 pm
Have you people looked at the prices your paying. I had my first day off in thirty-three days so I went to Costco on Memorial Day. They were closed. Why because they wanted an excuse not to be open. I was looking for a Coleman cooler and was going to write a nasty e-mail to them. I looked up the price at Costco and it was more than 10% more at Costco than Walmart. I paid $49 and Costco's price for the same exact cooler $54. It's not Sam's club where for business they opened at 7:00 AM and serve coffee and Danish.
Sharon says:
June 11, 2010 at 10:17 am
You do need to know your prices, and factor quantity vs. waste when buying bulk, but for what you're buying, Costco is hard to beat. It's a conscious decision to choose big name over store brands, and sometimes I do it for convenience...but comparing apples to apples, Costco almost ALWAYS can beat other store's prices. As for being closed on holidays, I appreciate that they are more concerned about employee morale and taking holiday's off than making a few more zillion bucks...stop whining and go back to Walmart.
floridalover says:
June 12, 2010 at 8:57 pm
I love my Costco membership. I'm an exec member and I love all of the services that I get with that. My car & home insurance is half the norm, my checks are 75% off what the bank was going to charge me. I was able to get a new ford Fusion through Costco's auto program (visit www.Costco.com and click on services) and with a 6 month old and a 6 yr old twins Costco is just awesome! And my Costco here in Orlando is great. And with the "exec promise" if i don't get back the $50 in addition then they'll credit it back and I can apply my executive reward towards my membership so it will cost me less. It's awesome!!!!!!!!!
John Frykman says:
June 13, 2010 at 2:43 pm
Stauschua,

No store will have the best prices on everything all the time. If you are simply basing your decision on one item at one time, you can find any store that would qualify as "the cheapest."

Business members can shop 1 hour earlier than Executive or Gold Star members at Costco.

Being open on holidays is a good thing if you are a customer. Not so good if you are an employee and must work on a holiday that your friends and family have off.
Mark says:
June 14, 2010 at 3:43 pm
I agree that Costco is worth the price of a basic membership. But I disagree with your analysis that you would only have to spend $2,500 per year to break even on the executive membership. Members already earn 1% refund on basic Costco membership. So to earn any additional cash back on the executive membership, you would have to spend at least $5,000, not $2,500. Since the cost of an executive membership is $100 vs. $50 for the basic membership, and the cash back percentage increases by 1% (2% for executive membership less 1% for basic membership), you can calculate the break even point by dividing the increase in price for the executive membership ($50) by 1%, which works out to be $5,000. Put another way, $5,000 times 2% equals $100 cash back for an executive member while a regular member would earn half that; $50. So you would have to spend $5,000 just to cover the additional cost of $50 for an executive membership. Your analysis fails to take into account that someone spending $2,500 would have earned $25 (ii.e. 1% cash back) with a basic membership, money that would be lost to Costco due to the higher membership fee if you don't spent at least $5,000. It may be that Costco will write you a check for the difference if you don't spend enough to break even on the Executive membership. But you could save yourself the trouble if you already know you don't spend that much in a year. If you're single and haven't made any very large purchases during a year, it's hard to spend more than $5,000 at Costco, which works out to $416.67 per month.
John Frykman says:
June 14, 2010 at 7:31 pm
Mark,

Your analysis is correct if you are basing it just on the rebate. But there are services, such as car insurance, that can save you 20% by being an executive member. I have my car insurance through Costco and all by itself, the 20% pays a good deal more than the extra $50. There are other services as well that cost less with the Executive card.
Karmickreator says:
June 14, 2010 at 10:13 pm
To mark:

You understnading and analysis are incorrect in so many ways, I dont no where to start.

1st: A basic member earns nothing back on purchses. If, however, you have an true earnings american express THEN any member (regardless of membership type) will earn 1% from AMEX, not from costco. I repeat basic members earn NOTHING back from Costco.

2nd: If someone pays for the basic membership ($50), they become a member with no reward. if they pay aN ADDITIONAL $50 to upgrade they would only need to spen $2500 over the course of the year to earn the upgrade cost back. Since members must always pay to have a membership you must consider that by upgrading they have the chance to earn a free membership (at the executive lever, $100) and have extra cash in pocket from Costco.

3rd: If an exec member spends $5k, their rewards would be $100. If they spend $2500 they would earn $50. So if you are looking for a totally free membership, just make sure you spend $5k or more, otherwise as long as you spend $2500 or more you will be paying less than $50 for your membership.

4th: $2500/12months= An average of $208.33 needs to be spent per month in order to break even for the upgrade... mopre than that and you are making money...

I hope this is making better sense, now.