A Costco Reward Gift That’s Nice to Have
Last Friday we received a membership renewal letter from Costco. Together with the notice is a $64.86 reward gift check from Costco. As a Costco Executive Member, we are able to enjoy the 2% cashback for shopping at Costco and the reward check is what we have accumulated last year, which also means that in 2008, we spent roughly $3,200 at Costco.
We became a Costco member in 2004, starting as a Goldstar Member, because we were not sure how much we could spend every year at the warehouse store. A Costco Executive Membership, which requires $50 more to upgrade from Goldstar Membership, would be a waste if we only buy milk and bread every a couple of month. However, we spent a lot more than we originally thought shortly after our first daughter was born: Formulas, diapers, wipes, etc. None of those baby stuff is cheap. The number trips to Costco increased, so did the amount spent each time. In 2006, when I was told how much we had already spent in the past six months at the store, it became quite clear that an upgrade to Executive Membership makes sense. Since Executive Members get 2% cashback on every dollar spent at the store, we only need to spend $2,500 or more in a year to let the membership pays for itself.
So, is the Costco Executive Membership worth it?
For us, yes, it worth the exta $50 a year since the third consecutive year that we get a reward check that’s more than $50. In addition to the 2% cashback, we also enjoy a few other benefits as an Executive Member:
- We use Ameriprise Auto & Home Insurance through Costco to save on auto & home insurance;
- I opened my ShareBuilder account through Costco and got some nice incentives;
- When I was actively using ShareBuilder to buy stocks every month, I got 25% rebate on quarterly commissions;
- Executive members also receive higher bonus to open an savings account at Capital One.
Of course, there are not the only benefits for Executive members. For example, Executive members also pay less monthly fee for Costco’s identity protection program and save 20% using Costco check printing service, etc., even though we don’t use any of these services right now.
Yes, that $50 a year is well spent for us 
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I used to work at Costco. All the time we’d be telling members to upgrade to the executive membership because it just made sense.
To make it even easier to figure out if you should upgrade, ask yourself if you spend about $200 a month there. I know a lot of families can easily drop $200 per trip to Costco, so even if you only go once a month, if you’re spending $200 a trip, its worth it to upgrade.
Or, if you ever make a large purchase there (TV, couch, computer, etc), it might be worth it to upgrade as well. I’ve rang through a couple of multi-thousand dollar purchases and got the member to upgrade – because it is basically like handing them money back (of course, you have to wait for the yearly check, but still).
Personally, we spend less than $150 a month at Costco, so it just isn’t worth it for us yet.
Actually it’s worth it for everyone to upgrade to the Executive Membership.
I have an Executive Membership, but didn’t receive nearly as much in cash back as I thought (only $12!!). I guess I don’t shop there enough. Anyway, I went up to the Customer Service desk to downgrade back to Gold and they said that if you receive anything less than $50 in cash back, Costco will refund you the difference and they did. I got my membership for $37 in April and they refunded me $25 cash! They next time you are under $50, bring in the check and they will refund the difference.
Needless to say I’ll be keeping my Executive Membership!
A good write up and useful comments! I’ve added a link to this article in my blog entry “Six ways to lower Costco Membership fee” http://costcohacks.blogspot.com/2009/05/six-ways-to-lower-costco-membership-fee.html
The problem i have with spending $50 extra for the costco executive membership is…
instead of Costco taking the additional $50 for the executive membership each year and putting it into an investment account and collecting interest for them, and only giving you back 2% on each purchase… I could take that extra $50 and instead put it into my ING Direct savings account and let it collect 1.35% for me.
In 10 years, I will have spent $500 on memberships with the other $500 that i would have spent to upgrade to executive memberships collecting interest for me, and compounding…
versus spending $1000 in 10 years for the executive membership, and only earning back 2% on each purchase which will only ever pay for my membership renewal.
Peter wrote above, “”"I could take that extra $50 and instead put it into my ING Direct savings account and let it collect 1.35% for me.
Costco Executive Membership only earns me back 2% on each purchase, which will only ever pay for my membership renewal.”"”
Why would you want to make 1.35% interest on your money, when you could be getting 2% from the Executive Membership?
The second part he wrote is incorrect. The earnings back are entirely liquid, and can be applied to membership renewal, any item Costco sells, as well as the ability to redeem them for CASH.