Here's What Happens When You Don't Use Your Costco Executive Membership

Many people join Costco to save money on things like groceries and household essentials. But if you do a lot of shopping at Costco, an upgrade to an Executive membership could make a lot of financial sense.

A basic membership at Costco costs $60 a year. The upgraded Executive membership costs $120. But in exchange for your extra $60, you'll be eligible for 2% back on your Costco purchases.

Now, there are some exceptions to this rule. Gasoline purchases at Costco pumps don't qualify for 2% back on your Executive membership. Neither do cigarette or alcohol purchases. But for the most part, if you shop at Costco often, an Executive membership could pay off.

But what if you upgrade your Costco membership only to find that you're not using it as much as expected? In that case, fear not -- you're not out of luck by any means.

Costco will make you whole

One of the things Costco is known for is outstanding customer service. The warehouse club giant has a generous and flexible return policy because it wants its members to be satisfied with the products they bring home.

Costco also wants its customers to be happy with their memberships. So if you upgrade to an Executive membership and don't use it to its full extent, all you need to do is go to customer service at Costco and ask to downgrade to a basic membership. You won't have to continue paying the higher fee for an upgraded membership that isn't benefiting you.

Best of all, you won't actually be out any money. See, at the time of your downgrade, Costco will see how much cash back you've gotten out of your Executive membership. And if your cash back total doesn't cover the cost of the upgrade, Costco will give you back the difference.

So let's say you decide to switch back to a basic membership after a year. At that point, Costco will see how much cash back your Executive membership has earned you. If it's only $50, Costco will return $10 to you so you're made whole on your $60 upgrade fee.

A no-risk situation

You may be nervous about upgrading to an Executive membership at Costco for fear that you won't spend enough for it to be worth it. If you spend more than $3,000 a year at Costco, the Executive membership automatically pays off, since 2% of $3,000 is $60 -- the exact cost of the upgrade. And even if you don't visit the store regularly, sometimes, all it takes is one or two larger purchases to put yourself over that $3,000 threshold.

But either way, you're not really taking on any financial risk with an Executive membership, because Costco will give you whatever portion of your upgrade fee you don't make back should you decide to downgrade. So if you're on the fence, try an Executive membership for a year and see how it goes. In a worst-case scenario, you'll end up breaking even.