Is the $130 Executive Membership worth the money?

Costco on average raises its rates every five and a half years, meaning that customers likely won’t see their bill go up again until at least 2030 if current patterns hold.

If you’re thinking about joining Costco, which membership should you choose? And if you’re already a Gold Star member, should you upgrade to the $130 tier?

On paper, the pricier Executive Membership sounds like a great deal. For just an additional $65 a year you can start receiving 2% cash back on all of your Costco purchases. If you combine it with the Costco Anywhere Visa card — which also gets you 2% back at the wholesale store — you’re getting an impressive 4% back every time you buy a 35-pack of Diet Coke. 

But you shouldn’t make an impulsive decision about upgrading your membership.

Instead, take some time to review your spending and assess your needs to see if it will actually be a good deal for you. Here’s what you need to know. 

The main information you’ll need to determine if the Executive membership is worth it is how much money you spend at Costco each year. 

Calculating if the $130 Executive Membership is worth the upcharge is simple. Because you get 2%, you’ll need to spend $3,250 to receive $65 in cash back. At that point, your effective annual membership rate is back down to $65. 

If you spend less than $3,250 at Costco each year, you’ll end up spending more money overall with the Executive membership’s higher annual fee than if you had stuck with the $65 Gold Star tier. If you fall into this bucket, the no-fee Costco Anywhere Visa card is a better choice if you’re looking to get cash back from the store.

But if your annual spend regularly tops $3,250, you’re better off with the Executive Membership. Every additional dollar you spend after $3,250 will bring your annual fee further and further below $65 and end up saving you money in the long run.

Costco’s membership page includes a calculator where you can enter how much you spend at the store each month to see how much cash back you can expect to receive at the end of the year.

The Executive membership also offers additional savings on Costco services like their bottled water delivery and pet insurance. If you buy your home or auto insurance through Costco, the Executive membership will get you some exclusive benefits such as roadside and lockout assistance.

If you’re on the cusp of a $3,250 annual spend but also use those services, it might make the membership worthwhile.

Of course, you can always take the Executive membership for a test drive.

Costco promises to refund the difference in cost between a Gold Star membership and an Executive membership in your first year if you aren’t satisfied. But the refund doesn’t happen automatically. To get your money back, you’ll need to go to your local Costco location and have the reimbursement processed at the membership desk. 

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