Is a Costco Executive Membership Worth the Cost?

There are two main categories of Costco memberships that individuals can buy. The basic membership -- formally known as a Gold Star membership -- costs $60 per year and includes access to Costco's warehouse clubs and adjacent businesses such as its gas stations and tire centers.

There's also the Executive membership, which costs $120, or exactly twice as much as the Gold Star level. However, the extra $60 per year from your checking account could be worth it depending on your spending habits. Here's a rundown of what a Costco Executive membership gets you and whether it might be a good idea for you.

Perks of the Executive membership

For most people, the biggest perk of an Executive membership is an annual 2% reward on qualifying Costco purchases. This works similarly to a credit card cash back rewards program, except the reward is only issued once per year and can only be redeemed for Costco purchases.

Gas is excluded from the rewards program, as are purchases of tobacco, Costco Shop Cards, food court purchases, and alcohol and prescription purchases in certain states. But even with these exclusions, getting 2% back on your Costco purchases (including online purchases) every year can be a big deal.

Think of it this way. If you spend $3,000 on groceries and other purchases in Costco warehouse clubs in a given year, 2% of this amount translates into a $60 reward that can be used at Costco, thereby justifying the higher cost of the Executive membership all by itself.

In fact, for people who spend a lot at Costco, this benefit could justify the Executive membership several times over. The annual reward is capped at $1,000, which would take $50,000 in spending -- but even if you don't come close to that level, it can be very valuable. Consider that the average family of four budgets nearly $900 per month for groceries alone, according to Mint, and it's not hard to see how those 2% rewards can add up quickly. Throw in some other purchases at Costco, and it's easier than you may think to have five-figure Costco spending in a year.

In addition to the 2% reward, there are two other benefits of Executive membership, according to Costco's website:

• Additional benefits and greater savings on Costco Services: Executive members get perks on things like auto insurance bought through Costco, such as roadside assistance and glass repair reimbursement.
• Extra benefits on select Costco Travel products: Executive members get bonuses, such as spa or resort credits, when booking certain vacation packages. For example, one Caribbean vacation package offers a $100 resort credit.

These benefits can vary widely, and many people don't use Costco for anything other than everyday shopping. So, for the bulk of members, the big question is whether you spend enough for the 2% reward to exceed the extra cost of an Executive membership.

Is the Executive membership worth the cost?

The short answer is "it depends." As we saw in the previous section, frequent customers could potentially justify the cost with the 2% reward alone. I have a family of four and we typically hit this spending threshold before the summer each year, so we find the Executive membership to be well worth the cost.