3 Reasons to Upgrade Your Costco Membership ASAP

Joining Costco can be a smart personal finance decision. But within the realm of signing up for a membership, you have choices. 

You can stick to a basic Costco membership for $60 per year. Or, you can upgrade to an Executive membership for $120 a year. In exchange for that higher cost, an Executive membership gives you 2% cash back on your Costco purchases, including purchases made on Costco.com.

You may have decided to limit yourself to a basic Costco membership to save money on your annual fee. But here are a few reasons to consider an upgrade to an Executive membership sooner rather than later.

1. You're spending more at Costco than you used to

Perhaps when you first joined Costco, you'd shop there once a month to stock up on a limited assortment of household essentials. But if you're now visiting Costco every week, and you're buying more items there than you used to, then it could be a good idea to upgrade your membership pronto.

It only takes $3,001 in annual Costco spending for an Executive membership to make financial sense. That's because $3,000 is your break-even point where you recoup $60 in cash back -- the exact amount of your upgrade. 

If you think there's a chance you'll spend above $3,000 at Costco this year all in, then go for the costlier membership. You could always downgrade after the fact if your spending starts to decline.

2. You're planning to book a vacation through Costco

We just learned that $3,000 in annual Costco spending is your break-even point when considering an Executive membership upgrade. But if you're planning to book a vacation this year through Costco Travel, then you might easily cross the $3,000 threshold with that purchase alone. So it makes sense to buy the Executive membership and get cash back for it. 

Even if you book a vacation through Costco Travel costing less than $3,000, chances are, if you spend even half of that, you'll get to upward of $3,000 in total spending this year if you also shop at the store somewhat regularly. So either way, an Executive membership could pay off.

3. You want to lock in today's rate in case membership costs rise

The last time Costco raised the cost of its membership fees was 2017. As such, Costco is overdue for an increase. And while the company hasn't made an official announcement about fee hikes, during Costco's last earnings call, CFO Richard Galanti said that an increase in membership fees is "a question of when, not if."

Given that it's been more than six years since Costco raised membership fees, there's a reasonably good chance a fee hike will happen in 2024. You may want to lock in your Executive membership at today's rate while it's still available.

Paying for an Executive membership at Costco doesn't make sense for every person who shops there. But if these factors apply to you, then you may want to think about making that upgrade soon.