Basic vs. Executive: What's the Right Costco Membership Plan for You?

It pays to crunch those numbers.

When I first started shopping at Costco years ago, I was skeptical about the idea of paying a fee to get access to discounted goods. But I quickly realized that my membership could more than pay for itself via the savings I reaped by buying discounted essentials in bulk.

In fact, several years after joining Costco, I made the decision to upgrade my basic membership to an executive membership. And I haven't looked back since.

If you're on the fence about which type of membership to get, there's a really easy way to figure it out. And that could, in turn, lead to a decision that saves you even more money.

Basic versus executive

A basic Costco membership costs $60 and gives you unrestricted access to Costco's product line. By contrast, an executive membership costs $120, so it's double the price of a regular membership. But in exchange for paying that fee, you get 2% cash back on your Costco purchases. And you also get some other perks, like extra Costco Travel benefits and discounts on certain Costco services (think things like bottled water delivery).

If you're not sure if the executive membership is worth upgrading to, all you really need to do is bust out a calculator and do some math. So, let's say you look at your credit card statements and see that you typically spend $400 a month at Costco, or $4,800 a year. An executive membership will give you 2% of that total back, or $96. So right there, you're getting savings. 

On the other hand, say you only spend $200 a month at Costco, or $2,400 a year. At a savings of only $48, an executive membership may not be worth it in that scenario -- unless you're able to make up the difference via savings on Costco's different services. (Incidentally, an executive membership also gives you access to The Costco Connection magazine. If I'm being honest, it's the least exciting thing about my upgraded membership.)

How your executive membership reward works

Costco's executive membership doesn't pay out rewards monthly. Rather, you'll get a reward certificate once a year. 

But I happen to like that system, because what commonly happens is that I'll take that certificate with me to shop and use it to cover my food costs. So depending on what I'm buying and how large that certificate is, I might get a week's worth of free groceries. That's not something I count on, so when I'm able to use my certificate, it frees up room in my budget.

Keep in mind that your rewards certificate is different from the cash back rewards you might get if you use your Costco Anywhere Visa® Card by Citi. That credit card gives you cash back on your purchases, but you'll get that cash back regardless of the type of Costco membership you have.

An easy decision

The decision to upgrade your Costco membership or not should really be a simple one. If you'll earn enough cash back to justify an executive membership, go for it. Otherwise, stick to the basic plan if it works out better financially for you.