While the regular membership plan is perhaps sufficient for many shoppers, is there ever a time where it would be cost effective to upgrade to the Executive level? You see signs all over Costco stores urging customers to take advantage of the 2% cash back rewards offered to Executive Members. How much would you need to spend to make the price difference in memberships worthwhile?
At 2% cash back, you would need to spend around $2750 per year ($229 per month) to break even. Some people will do this easily if they are weekly or monthly Costco shoppers. Others may not. The great thing with Costco is that with its 100% customer satisfaction guarantee, if you do not benefit from an Executive level membership they will give you back the difference between the purchase prices of memberships.
Besides the 2% cash back perk for Executive members, there are other benefits to upgrading. Costco members can all benefit from home and auto insurance, but by upgrading to the Executive level, members can receive lower rates. Costco also includes complimentary Roadside Assistance for Executive members who sign up for auto insurance through them (but not for regular members). Costco provides check printing services to their customers and offers a significantly lower rate to those with Executive memberships. There are also the perks of car rental discounts and life and health insurance plans. Costco also offers cheaper home phone plans, as well as auto, boat, and recreational vehicle loans to Executive members.
It seems that the bottom line is for Costco shoppers to consider their monthly and yearly spending habits. If you are likely to spend around $229 each month at Costco, you will break even with the price difference between membership fees and can also benefit from Executive perks. It may be beneficial to some shoppers to upgrade in order to earn some of the perks enjoyed by Executive level members.
After tracking your general purchase history, you will have a better idea of whether or not you will benefit from the upgrade. The good news is that with Costco’s satisfaction guarantee you are really at no financial risk. If you do not get your money’s worth by the end of the year, Costco will simply pay you back the difference in membership prices, although you have to ask for this refund. It appears that the upgrade from a regular membership to an Executive level membership comes with no risk but does carry the potential for great reward.
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