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Costco Executive Membership: Is It Worth It?

Published 7/4/09 (Modified 2/24/14)
By MoneyBlueBook

Editor's Note: Thank you for your interest, these offers expired and are no longer available.

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.

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 waives the annual fee with a paid Costco membership. Terms and restrictions apply.

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

  1. Sandy says:

    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.

  2. Tifa says:

    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.

  3. ChrissyO says:

    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

  4. Julie Lender says:

    Very insightful article. Is Costco really a money-saving option? That is still up for debate.

  5. Dvr surveillance says:

    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.

  6. SurlyTrader says:

    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.

  7. Laura says:

    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.

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