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A lot of Costco shoppers are on a tight budget . Stubbornly high inflation is pushing a lot of people to their financial limits, forcing them to think carefully about the purchases they make -- even in the context of everyday items like groceries and cleaning supplies.
But if you can find an extra $65 to spend at Costco , there's one specific purchase it pays to make.
An upgraded Costco membership could work wonders for you
The current price difference between a Gold Star membership at Costco and an Executive membership is only $60. But starting Sept. 1, you'll have to spend $65 more for the upgraded membership. Beginning next month, a basic Costco membership will cost $65, while an Executive membership will cost $130.
If you have an extra $65 to spend at Costco , you may be interested in using it to load up on extra items for your fridge or pantry. But a smarter move could be to pay to update your membership.
The great thing about Costco's Executive membership is that it gives you 2% cash back on your purchases. Over a year, that could result in a lot of savings if you shop at Costco regularly.
Let's say your weekly Costco haul amounts to $100, and you shop at Costco 50 weeks out of the year. That has you spending $5,000 in total and getting $100 back from your Executive membership. That $100 can easily cover your $65 upgrade fee and leave you ahead by $35 compared to sticking to a basic Costco membership.
Even if you only shop at Costco every other week spending $100 per trip, that's still $2,600 over a year. If you make some larger one-off purchases at Costco, that could get you beyond the $3,250 a year it takes to break even on the $65 Executive membership upgrade cost. So even if you only spend $3,260 a year, the higher-priced membership still makes financial sense.
Costco provides a membership guarantee
You don't want to spend an extra $65 on an Executive membership only to not accrue enough cash back to make up that fee. But thanks to Costco's more-than-reasonable membership downgrade policy, that's not something you have to worry about.
If you see that the Executive membership isn't working out for you, you can downgrade to a Gold Star membership, no questions asked. Costco will refund you any portion of the $65 upgrade fee you didn't make back with the 2% reward.
Let's say you only spend enough to earn $50 back through your Executive membership. When you downgrade, you'll be refunded $15 so you're made whole on your $65 upgrade fee.
For this reason, it pays to invest an additional $65 in an Executive membership if you shop at Costco on any sort of regular basis. In a worst-case scenario, you'll get that money or a portion of it returned to you if you don't make enough money back. And in a best-case scenario, you'll end up with extra cash in your pocket you can use to pay for future Costco purchases or anything else you might need.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team. Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy .
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