3 Times You May Want to Shop at Costco With Cash

Shopping at Costco is a great way to save money on groceries and household essentials. And if you swipe your credit card at the Costco checkout line, you might even snag some nice cash back on your purchases. (That's on top of the cash back you might score if you have a Costco executive membership, which gives you 2% back on everything you buy at Costco.)

But sometimes, it pays to shop at Costco with cash rather than a credit card. Here are a few such instances.

1. You don't have a credit card that Costco accepts

Costco accepts Visa cards, and only Visa cards. If you have one, you're all set. If not, it may not be worth it to apply for another credit card for the express purpose of being able to shop at Costco. So at that point, cash may be your only option.

To be clear, you can use a debit card at Costco -- you don't have to bring physical cash with you. But handing over cash might help you keep better tabs on your spending. And it also might prevent you from making impulse buys at Costco.

2. You're already in debt

Paying off a credit card balance can take time. But one important thing to do when you're trying to whittle down an existing balance is to not add to it. So if your goal is to be free of your credit card debt, you really don't want to charge any more expenses if you can help it. And that includes Costco purchases.

3. You're trying to boost your credit score

A higher credit score could do a lot of good things for you. It could make it easier to get approved for a loan should you decide to apply for one, and it could set you up for a more competitive borrowing rate.

One good way to boost your credit score is to keep your credit utilization as low as possible. Credit utilization speaks to the amount of available credit you're using at once. If you have a $5,000 spending limit on your credit cards and have an outstanding balance of $1,000, it means you're at 20% utilization.

A credit utilization ratio of 30% or less could be helpful to your credit score. So if you're hovering around that mark and want to get your utilization down, you'll need to limit the extent to which you swipe your credit card at the store. Paying cash for your Costco purchases could help you keep your total credit card balance low.

Many people prefer to pay for Costco purchases with a credit card because they can earn cash back on what they're buying. And also, for some people, using a credit card actually makes it easier to keep tabs on their spending because all of that information is summarized when you log into your credit card account. But if these situations apply to you, then you may want to stick to cash at Costco -- at least for the time being.