Should You Keep Your Costco Membership if Rates Rise in 2024?

Many people enjoy shopping at Costco because doing so can help them free up more money to add to a savings account. Aside from discounts on things like groceries and everyday essentials, a Costco membership offers a world of benefits.

You can use Costco to book an all-inclusive travel package at a competitive price. Or, you can use Costco to replace your car's tires at a low cost or fill up your vehicle's tank for less.

Right now, a basic Costco membership costs $60 a year, while an upgraded Executive membership costs $120. The Executive membership offers 2% cash back on Costco purchases, so it's a good option for people who shop at the store a lot.

But while these are the fees associated with a Costco membership right now, that has the potential to change. See, Costco hasn't raised its fees since June 2017. And that's a longer stretch than usual to go without a fee hike.

During the company's last earnings call, CFO Richard Galanti said, "it's a question of when, not if," in the context of an upcoming fee hike. And while he did not state that fees are set to rise in 2024, that's certainly a possibility.

That raises the question -- is your Costco membership worth keeping if it starts to cost more in the new year? Or should you dump it once the price goes up?

How much do you save at Costco?

The last time Costco raised membership fees, a basic membership went up by $5 and an Executive membership rose by $10. There's a good chance that an upcoming fee hike will look similar. If so, that would bring the cost of a basic membership to $65 and an Executive membership to $130.

If your current Costco membership is worth paying for, then chances are, it'll still be worth it to pay for a membership for $5-$10 more per year. But if you're on the fence, crunch the numbers.

Let's say you only have a basic membership because you only go to Costco once a month. The next time you're there, keep your receipt and try to compare the cost of your Costco purchases to what the equivalent would cost at a supermarket or big-box store. Then, calculate your projected savings over a year.

So let's say you do the math and figure you saved $15 during your last Costco visit. If you save $15 on 12 different occasions during the year, then that's $180. So even if you end up having to spend $65 on a basic membership, you're still coming out ahead financially.

Why a fee hike may not be so bad

As a consumer, it's natural to want to pay as little for any given product or service as possible. But one thing to remember about Costco's business model is that the company uses the revenue it collects in membership fees to help offset the cost of procuring the goods it sells.

To put it another way, by paying those membership fees, you're often getting access to much lower prices than what you'd find at a regular store. So if fees increase at Costco in 2024, know that in return, you may be able to reap even more savings on the things you buy there regularly.