Costco has its perks. For $65 or $130 a year, you get access to a warehouse of goods sold in bulk. The prices are competitive, an Executive membership earns cash back, and you can return just about anything — apparently, even used Christmas trees in January.
For some people, however, the notion of paying a yearly subscription to shop may seem backward. Why pay $65 annually when you can shop at a discount grocery store (like Aldi) for free? It’s certainly a question worth asking. And while my household is currently maximizing our Costco membership, I’d be more hesitant to renew it if this one thing happened.
Another hike in membership prices
Right now, you can get a basic Gold Star Costco membership for a yearly membership fee of $65. An Executive membership, which lets you earn 2% back for up to $1,250 in annual rewards, costs $130, but can pay for its own upgrade from basic with about $3,250 in annual spending. You could also save up to $300 over the next year by using this little-known Costco credit card trick.
Getting a basic membership for $65 isn’t too much to ask, especially if Costco is helping you save more than that. However, for those who have been Costco members for several years, we know that $65 is the highest a Costco membership has ever cost.
Earlier this year, for instance, you would have paid $60 for a basic membership, or $120 for Executive. The $5 price hike for Gold Star and $10 for Executive was the first membership fee increase since 2017. While that’s seven years without raising the cost of membership, it follows a larger trend among companies to raise the cost of services.
For me, the news of a price hike was all the more troubling as I recently moved and am now closer to Sam’s Club and BJ’s. A basic membership at Sam’s Club is $50, while BJ’s is $55. While these warehouse clubs are not identical, Sam’s Club sells pretty much everything I need at prices comparable to Costco.
If Costco was to raise its Gold Star membership fee to $70 without offering new benefits to offset the price hike, I’d have to say ciao. Already paying $65 means that I’m paying $15 more than what Sam’s Club is charging for an equivalent membership. Since I think of saving money as cumulative — $5 here, $3 there — rather than a single event, this $15 difference already makes me slightly uncomfortable.
Your household situation will be different than mine
I’m not suggesting that every Costco member join Sam’s Club instead of sticking with Costco. As I said before, Costco is a different warehouse than Sam’s Club and could help your household save more money than other warehouse clubs. But if what you save at Costco can be replicated at Sam’s Club or BJ’s, another fee increase might be enough to force a change.
Currently, I’m sticking with Costco, especially since I’m earning 3% back on a credit card at the warehouse. Side note: If you’re only earning 2% back at Costco — or heaven forbid 1% back — check out the best credit cards to use at Costco to see how you can maximize your cash back.
At the end of the day, we’re all trying to spend less on our credit cards. The good thing about Costco: If you’re not 100% satisfied with your membership, you can cancel and get a refund. If another membership club steals your business, you won’t waste any money by switching before your Costco membership ends.