3 Things You Probably Didn't Know About a Costco Executive Membership

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Some people struggle with the decision to join Costco. And once they decide that a membership makes sense, there's yet another decision to tackle -- whether to upgrade to an Executive membership or stick with a Gold Star (or basic) one. Given that an Executive membership costs double what a basic membership does, it's a decision worth putting some thought into.

But to make that decision an informed one, you need to know exactly how the Executive membership works.

You're probably aware that the key difference between that and the basic Costco membership is the cash back an Executive membership gives you. But here are a few things about the Executive membership you probably weren't aware of before.

1. The cost is going up

Right now, an Executive membership at Costco will cost you $120, while a basic membership only costs $60. But beginning Sept. 1, the cost of an Executive membership is increasing from $120 to $130 per year. And it's not just the Executive membership. The price of a basic membership is also rising from $60 to $65 per year.

This change marks Costco's first fee hike in over seven years. But the higher cost is something to consider, because it will now take more annual Costco spending to recoup the cost of the Executive membership upgrade.

Specifically, once the above change takes effect, it'll take $3,250 in annual Costco spending to make back the $65 Executive membership upgrade fee. Right now, you only need to spend $3,000 to recoup the cost of the upgrade.

2. There's a limit on how much cash back you can rack up

The primary benefit of signing up for an Executive membership at Costco is getting 2% cash back on your purchases. But that cash back isn't unlimited.

Currently, your cash back from an Executive membership is limited to $1,000 per year. Starting Sept. 1, that limit will rise to $1,250.

Before you get too excited about that, though, realize that to even snag $1,000 back with an Executive membership, you're looking at spending $50,000 at Costco in the course of a year. To get $1,250 back, you'll need to spend $62,500.

So unless you're planning to buy everyone you know a new TV from Costco for the holidays, the limit that applies to Executive membership cash back probably doesn't even apply to you, because you'll likely end up with a lot less. And that's a good thing!

3. You're guaranteed to make back the cost of your upgrade

Upgrading to an Executive membership at Costco means having to shell out an extra $60 or $65 extra (depending on the timing of when you sign up). But if you're worried you won't spend enough at Costco to get enough cash back to make up that difference, well, you don't have to be.

Costco doesn't broadly advertise this rule, but in a nutshell, you're guaranteed to get your upgrade cost back with an Executive membership. If you don't spend enough for that to happen naturally, you can downgrade to a basic membership and Costco will give you the difference back at the time.

So here's how that might work. Let's say you buy an Executive membership this fall at a cost of $130, but only spend enough in the year that follows to earn $50 in cash back. If you tell Costco you want to go back to a basic membership at that point, you can downgrade and it'll give you back the $15 difference.

What this means is that upgrading to an Executive membership is truly risk free. So if you're on the fence, just do it. You really have nothing to lose.

Costco's Executive membership has the potential to be a great deal. Now that you're aware of how it works, you can better decide whether it's worth trying out.

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