You Can Use Your SNAP Benefits at Costco. But Should You?

Don't assume that Costco is the cheapest way to buy groceries.

Costco's low prices, free samples, and affordable food court are just a few of the reasons the chain has attracted millions of fans around the world. If you receive Supplemental Nutrition Assistance Program (SNAP) benefits, you may be pleased to know you can spend them at Costco warehouses. Here's how it works and why it might not be cost effective for every family.

Using your EBT card at Costco

SNAP benefits get loaded onto an electronic benefits transfer (EBT) card, which can then be used like a debit card in many stores, including Costco. However, your EBT card will only work in Costco warehouses. You can't spend your SNAP benefits online at Costco.com or in the food court or Costco gas stations.

Another restriction? Your EBT won't pay for non-SNAP approved items, whether that's at Costco or anywhere else. SNAP benefits are designed to pay for essentials like dairy products, meat and fish, fruit and vegetables, and non-alcoholic drinks. You can't use them to pay for things like alcohol, pet food, tobacco, or other non-SNAP products on sale in the grocery mecca.

That said, if you buy a mix of items, you won't need to separate them before you get to the checkout. One commenter reports that you can first use your EBT card to cover SNAP items and then pay the remaining non-SNAP balance afterward.

You can also use cash back apps with your EBT card at Costco. Several cash back apps will pay rewards on Costco spending if you scan receipts after you've been to the store. It doesn't matter whether that spending comes from your SNAP benefits or another route, making it a great way to get a few extra dollars into your bank account.

Should you use your SNAP benefits at Costco?

The biggest consideration when it comes to spending your SNAP benefits at Costco is the $60 annual membership fee. If you're considering paying that fee, you'd need to save at least $5 a month for your membership to pay for itself, so think about how much you'd save.

You might even consider paying $120 a year for the executive membership so you can earn 2% back on your purchases. Bear in mind that the maximum monthly SNAP benefit for a family of four is $939. A family would need to spend $500 a month at Costco -- more than half those benefits -- to cover the $120 executive membership fee. Any additional savings would be a bonus. All the same, $120 is a lot to pay out in a lump sum and $500 is a lot to spend in one store every month. On top of which, many families don't receive the maximum SNAP benefits and there are restrictions on how long you can receive benefits.

That said, it is possible to shop at Costco without being a member. For example, you could get someone who is a member to take you. They would need to show their membership card upon entry and you'd use your EBT card to pay. However, other methods of getting around the annual fee -- such as using Costco.com or spending with gift cards -- won't work if you're paying with an EBT card.

Here are some other factors to consider.

1. Emergency benefits won't last forever

If you live in a state that still pays emergency SNAP allotments, that extra money won't last forever. States can only pay the extra food benefits while the national health emergency is in place. Right now the government hasn't said it will extend the emergency, but it hasn't said it will terminate it either.

It hasn't officially extended the emergency beyond its current expiration date of mid-January. However, it's also promised to give 60 days' notice before any termination, so we're in a kind of health emergency limbo. At the time of writing, we can assume that states will be able to pay that emergency cash until at least the start of February. Don't pay the annual Costco fee thinking you'll get extra SNAP money for the whole of next year.

2. Costco isn't always the lowest cost option

Costco can be great value, but it doesn't always come out on top price-wise. You may be able to get better deals at low-cost grocery stores that don't charge a membership fee. Moreover, if your state runs a double up food bucks program, you could get two-for-one on all your fruit and vegetable spending at participating stores and farmers markets. This may well end up being significantly cheaper.

3. Bulk buying isn't for everybody

Bulk buying can be a great way to save money, especially if you buy non-perishables that will last. Even so, it won't suit every household. For example, some families might not be able to afford to buy six pounds of ground meat at once, even if it works out cheaper overall. Teaming up with a neighbor or family member might make those bulk savings more feasible, and could also let you split the annual membership fee.

Bottom line

Every family is different, and only you can work out whether your SNAP benefits will go further if you use them at Costco. Just don't automatically assume Costco is the lowest-cost option, particularly if you need to pay for the annual membership. After all, $60 can buy a lot of groceries so it's worth doing some homework before you pay that annual fee.