There’s a lot to love about Costco, from its great deals on in-store and online items to its food court, which can come in handy on those nights you don’t feel like cooking. Its main drawback, if you could call it that, is that you have to pay for the privilege to shop there.
Memberships range from $65 per year for Gold Star members to $130 per year for Executive tier members. That might easily be worth it if you’re there every week. But if you visit Costco infrequently, you might question whether it’s actually worth it for you to renew yours. Fortunately, it’s not too difficult to figure out the answer.
It’s simple math
The question you have to ask yourself is whether the amount you save each year by shopping at Costco is greater than the membership fee you’re paying. If the answer is yes, it’s worth hanging onto. And if not, you could benefit by canceling it.
Figuring this out requires a little price comparison. Look at what you buy in a typical month at Costco and compare what you paid there to the cost of the same or comparable items at other retailers. If you’re ordering online, don’t forget to factor in shipping costs.
If you own a credit card that offers bonus rewards at Costco or wholesale clubs, consider the rewards you’re earning as well. And if you don’t already have one but you shop at Costco all the time, check out some of our favorite Costco credit cards. They could help you shave even more off of Costco’s already low prices.
Once you’ve got a rough idea of your monthly savings, multiply this by 12 to get an approximate annual savings. Compare this to the cost of your membership to decide if it’s worth holding onto. For example, if you can save $20 per month by shopping at Costco, that equals $240 per year, which easily justifies the Gold Star membership cost of only $65 a year.
Canceling your Costco membership isn’t your only option
Those with Costco Executive memberships who are on the fence about renewing could also consider downgrading their membership instead of canceling it. To decide if this is worth it, review your total annual Costco spending from the last year.
Only Executive members get 2% back on Costco purchases. If your annual Costco spending totals at least $3,250, then you’ll earn back the extra $65 you’ve spent on the Executive membership over a Gold Star membership.
If you’re close to this amount, it might still be worth holding onto your Executive membership. Your spending habits could change and items get more expensive over time, so you might pass the $3,250 mark in the next year.
Downgrading to the Gold Star membership could make sense, though, if you don’t think you’ll spend anywhere close to $3,250 at Costco this year. Doing this will help you save on your next year’s subscription, plus Costco will refund you the difference between the 2% back you earned and the $65 required to upgrade from the Gold Star to the Executive membership. For example, if you only earned $40 in cash back at the time you downgrade to a Gold Star membership, Costco will refund you $25.
It’s ultimately your call. If you’re on the fence, you could always try canceling your Costco membership for a month or two and then seeing how you feel. If you realize your savings account is dwindling from the inflated prices you’re paying at the regular grocery store, you might decide then that renewing your membership is worth it.
