Surprise! This Is Costco's Most Popular Membership

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In the context of the various expenses you pay for in life, there may be different tiers you can choose from. Take Netflix, for example. You can pay as little as $6.99 per month for ad-supported content. But the standard package without ads costs $15.49 per month, while the premium offering costs $22.99.

Similarly, if you're joining Costco, you have choices. You could stick with a basic (Gold Star) membership at a price of $60 per year -- though that's increasing to $65 a year come September). Or, you could pay double for an Executive membership -- $120 as of now, or $130 beginning Sept. 1.

You might assume that the basic Costco membership is the most popular one among consumers. But you'd be totally wrong.

The Executive membership wins out

More people will be impacted by Costco's Executive membership fee hike than an increase in cost for the basic membership. That's because more than half of the warehouse club giant's memberships are of the Executive variety.

All told, Costco maintains about 52 million Executive memberships. And there's a good reason for that.

With the basic membership, you get to enjoy savings on the items you buy at Costco, but that's about it. With an Executive membership, you're rewarded to the tune of 2% cash back on your various Costco purchases. And this benefit extends beyond everyday items like groceries and cleaning products.

If you book a $5,000 vacation through Costco, guess what? You're eligible for 2% back if you're an Executive member. And if you decide to buy a new $1,000 TV or $1,500 fridge, those purchases, too, are eligible for cash back. So all told, the Executive membership could make a lot of financial sense, despite it costing double what a basic membership will run you.

Should you get an Executive membership at Costco?

If you only shop at Costco infrequently, then you may want to stick with a basic membership. But you should definitely consider an Executive membership if:

• You shop at Costco at least once a month
• You tend to make at least one big-ticket purchase from Costco each year, like electronics or jewelry
• You're planning a vacation soon and think you might book through Costco
• You tend to do your holiday shopping at Costco

When you do the math, you'll see that it currently takes $3,000 in annual Costco spending to break even on the cost of an Executive membership update, since 2% of $3,000 is $60. Now starting in September, your break-even point will rise to $3,250 to cover the $65 difference in membership costs. But even then, if any of the above criteria apply to you, there's a good chance an Executive membership will pay off.

And if it doesn't, guess what? It's really no big deal, because Costco will give you your money back if you don't earn enough cash back to recoup your upgrade fee. If you spend an extra $65 on an Executive membership but only earn $55 in cash back, you can downgrade to a basic membership after 12 months and Costco will give you the $10 difference at the time.

Because of this, it's pretty easy to see why the Executive membership is Costco's most popular. So it may be time for you to upgrade if you haven't done so already.

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