Long time readers may recall a few years ago I compared prices between major Canadian grocery stores and discovered that Costco was a great place for Canadians to shop for groceries. Not only is Costco the overall leader in best prices for groceries, but the overall quality is also better compared to the likes of Superstore and Walmart.
Recently, I compared the prices between Costco, Superstore, and Walmart to see how inflation has affected the overall prices of groceries. I was pleasantly surprised to find that Costco had the lowest price increase compared to the other two stores.
It is also worthwhile mentioning that besides having better grocery prices, Costco also offers attractive pricing for prescriptions, gas, photo services, tire services, shoes, clothing, and toys. Costco members also can find attractive prices using Costco Travels, which is often much cheaper than their counterparts like PC Travel and Expedia. So overall, we enjoy shopping at Costco and saving money.
To shop at Costco, you must have a Costco membership. The basic membership costs $60. Seeing as Costco continues to be the cheapest grocery store in Canada, a few readers have reached out and asked me if paying the extra $60 for the Costco executive membership is worth it or not.
Is the Costco executive membership worth the extra $60? Let’s find out.
Costco Memberships – Differences
Before we determine if it’s worth getting the Costco executive membership or not, we must go over the four different Costco memberships.
Gold Star Membership
The Costco Gold Star membership is the basic Costco membership. At $60 per year plus taxes, this membership allows you to shop at Costco and take advantage of the cheaper prices. The Gold Star membership includes up to two complimentary cards. The additional card can be given to a spouse or another family member over 18 that lives at the same address.
If you only occasionally shop at Costco, I think the Gold Star membership is a good choice.
Business Membership
If you’re a licensed business owner, manager, or non-profit organization, you can apply for the Costco Business membership at $60 per year plus taxes. The business membership allows you to purchase for resale and you can add up to six additional cards at $60 each.
Executive Membership
The Executive membership costs $120 per year plus taxes and includes a complimentary card for a spouse or another family member over 18 that resides at the same address. The biggest benefit for the executive membership is the annual 2% cash back reward.
Business Executive Membership
The Business Executive membership is very similar to the executive membership. The key difference is that you can add up to six people to your membership at $60 per year, plus taxes. The Business Executive membership also allows you to purchase items for resale.
Costco Memberships – Summary
Here’s a quick summary of the different Costco memberships and their benefits:
| Gold Star | Business Membership | Executive Membership | Business Executive Membership | |
| Include a Free household card | Yes | Yes | Yes | Yes |
| Annual 2% reward | No | No | Yes | Yes |
| Exclusive offers and additional discounts | No | No | Yes | Yes |
| Receive Costco Connection magazine and Costco.ca insert by mail | No | No | Yes | Yes |
| Add people to your membership | No | Yes | No | Yes |
| Purchase for resale | No | Yes | No | Yes |
Costco Executive Membership Benefits
So, is the Costco Executive membership worth the extra $60 compared to the Gold Star membership? Before I answer that question, let’s go through Costco Executive membership’s major benefits and attractions.
2% cash back on purchases
This is the major reason why someone would consider signing up for the Costco Executive membership. The 2% cash back reward is available on most Costco purchases, up to a maximum of $1,000 (you’d need to spend $50,000 a year to earn $1,000).
The 2% reward is based on the annual Costco wholesale purchases made on the same membership account. The reward is 2% of pre-tax purchases of most Costco merchandise including Costco Travel.
An important point to know is that the following items are not eligible for the 2% reward:
- prescription drugs
- all tobacco products
- all food court items
- all bottle deposits and refunds
- all taxes and levies
- all Costco Services
- eye examinations
- tire disposal fees
- tire mounting and balancing, and stud installation fees
- gift certificates and Costco Shop Cards
- membership fees
- oil disposal fees
- home delivery charges
- administration fees
- gasoline
- charitable donations
- third party insurance payments
- postage stamps
- environmental fees, deposits or levies
- all alcoholic beverages
- other items, products and services specified as exclusions from time to time
- all liquid milk and cream items (e.g., 1%, 2%, homogenized and skim milk, chocolate milk, light cream, cream blends, coffee cream, whipping cream, eggnog, buttermilk, concentrated milk, etc.) (in the provinces of Quebec and Nova Scotia only)
If you’re in Quebec, all pharmacy items as well as all optical centre items and services are excluded from the 2% reward.
Considering the Costco Executive membership is $120 per year, or $60 more than the Gold Star membership, this means at a minimum, you need to spend at least $3,000 per year to make the extra cost worth it ($60 divided by 2% equals $3,000).
So, if you spend over $250 per month at Costco on items applicable for the 2% cash back reward, the Costco Executive membership is worth it. For our family, we shop at Costco at least once a month, sometimes two. It is not unusual to come out to Costco with a cart of groceries worth more than $250. (When I was shopping for our household and my parents during the COVID-19 pandemic, we had a receipt with almost $1,000!).
If you want to earn back the $120 with the Executive membership, that means you need to spend $6,000 per year at Costco, or $500 per month. If you do most of your grocery shopping at Costco, it’s probably possible to hit that monthly amount. Alternatively, if you plan to buy big-ticket items like TV, appliances, computers, or furniture, then the 2% cash back rewards can add up quickly.
For our household, we usually get around $100 cash back each year, making the Executive membership worth the money.
One thing I have heard from other Costco members is that if you sign up for the Executive membership but did not earn enough money back to warrant the extra $60, Costco would send you a voucher worth the amount of the money “wasted.” You can redeem the voucher at Costco warehouses and it is good for a year. For example, if you earn only $15 on cash back rewards, Costco would send you a voucher worth $45.
Now, I haven’t come across this scenario, so if any readers have encountered this, it would be great to get a confirmation.
Exclusive offers and additional discounts
Costco offers Executive members exclusive offers and additional discounts. Being Executive members ourselves, we haven’t found these offers to be too attractive. Because these offers and discounts are typically related to services like insurance, real estate, mortgage programs, or other business service programs that we don’t really use.
Having said that, I have seen some roadside assistance offers which can be useful to some people.
In terms of discounts, Costco occasionally offers Executive members-only discounts on select items. For example, a while ago they had a $2 discount for each bag of cashews.
Costco Connection Magazine & Costco.ca inserts by mail
Personally, I haven’t spent too much time reading the Costco Connection Magazines to determine whether or not they are good. But by quickly flipping through the magazines, I have come across some new products and deals that are quite worthwhile.
Earning more rewards with the Costco Credit Card
One thing you can do to boost your rewards earning power is to combine Executive membership and the Capital One Costco Mastercard. The Capital One Costco Mastercard has no annual fee and offers 3% cash back at restaurants, 2% on gas purchases, and 1% on all other purchases. One key thing to note is the first $3,000 on other purchases only earns you 0.5%.
Note: CIBC has recently teamed up with Costco. The CIBC Costco cards haven’t been announced yet but I suspect the earn rate will be similar to the Capital One Costco Mastercard.
By being a Costco Executive member and shopping with the Capital One Costco Mastercard at Costco, you’ll earn 3% cash back. However, there are other credit cards that offer higher earning power than 1%. For example, the HSBC World Elite credit card that we use earns 1.5% on all purchases.
For reward points collectors like us, it is worth it to find the best combination to allow for the maximum rewards earning power.
How to shop at Costco without a membership
If you aren’t completely sure whether to get a Costco membership or not, you can still shop at Costco without a membership. All you have to do is get a Costco Cash Card (i.e. gift card).
When you go into the Costco warehouse, you simply show the Costco Cash Card and you will be allowed in as a non-member.
But if you are not a Costco member, you can’t purchase the Costco gift card. Furthermore, the Costco Cash Card cannot be reloaded. Therefore, you need to find someone with a Costco membership to buy the gift card for you.
Is the Costco Executive membership worth it?
If you frequently shop at Costco and spend $250 or more per month, I think it is a no brainer to sign up for the Costco Executive membership. The extra $60 will pay for itself very quickly when you earn 2% cash back rewards every time you shop at Costco.
But you definitely need to make sure you don’t just mindlessly shop at Costco and spend all your money there. It’s worthwhile to read up on how to survive a shopping trip to Costco.
Summary – Costco Membership Comparison
There are four different Costco memberships and depending on your shopping history and trends, it may be worthwhile to pay the extra $60 per year to get the Costco Executive membership and earn the extra 2% cash back rewards.
Unlike other grocery stores, Costco can get extremely busy, it can be difficult to find a parking spot and the warehouse is often packed with people, even during the COVID-19 pandemic. I have personally found that there are fewer shoppers when I shop just before closing time or during lunchtime on weekdays. If you want to avoid the crazy Costco crowds, definitely avoid weekends and around dinner time.
Dear readers, do you have a Costco membership? Do you find the membership worthwhile?
At least in Washington State, I feel like Costco is less and less of a bargain these days. I can routinely find better deals elsewhere on almost every item, with the exception of some of the organic food or ‘high-end’ packaged food.
I think they’ve intentionally done this to ‘migrate’ their customer base to higher-income individuals.
That’s not to say I’ve entirely stopped shopping at Costco mind you. I still buy gas there, and sometimes they have great deals on the “treasure hunt” items, but you really have to watch how much your paying there.
That’s an interesting observation Mr. Tako. I wonder if this is indeed their intent.
We just got a Costco membership (finally!) but were cheap and only signed up for the Gold Star Membership. So far it’s been great, but as a small family we don’t find ourselves going to Costco that often. Maybe next year the benefit of upgrading will be more than worthwhile.
It doesn’t hurt to monitor your Costco spending and determine whether it’s worth it to upgrade or not.
Yea that’s a good idea. I’ll do that this year and reevalulate when it’s time to resubscribe.
Hi Tawcan, I looked at Costco’s annual report, look at how much their membership fees contribute to the operating income.
https://investor.costco.com/static-files/7ef7bed6-c48f-4687-9c82-eb104b4823a5
The membership fees are basically pure profit, no merchandise to buy or handle or stock.
Just need a computer system to keep track and maintain it all.
Excerpt from Aug.30-2020 consolidated statement of income (In millions of dollars)
Net Sales: $163,220
Membership Fees: 3,541 <———-
Less:
Merchandise Costs: (144,939)
Selling, general & Admin:(16,332)
Preopening expenses: (55)
Operating Income $5,435 <——
That’s why the membership model works. 🙂
Good article. Access to Costco pharmacies (at least in Ontario) do not require a Costco membership as they are separate independent businesses. Their dispensing fees and markup are also usually the lowest.
That’s a very good point. I’ve found Costco pharmacies are usually cheaper than other pharmacies.
We have the executive membership. We normally get $50-$60 back each year, so the upgrade is paying for itself.
I also really like Costco for its corporate citizenship. They have demonstrated that a retail company can be incredibly successful while also treating its employees very well. Walmart seems to be heading in the other direction and following the Amazon model.
Yup, the upgrade pays for itself if you shop regularly at Costco, that’s for sure.
I think it is great to be a Costco shareholder. 🙂
Bob you might want to let your readers know that the Costco credit card is changing.
https://www.cibc.com/en/personal-banking/credit-cards/costco.html
Thanks I added that in the article.
Tawcan, thanks for this article, I thought it was good, and it was helpful to me. We live in the US and a different life stage as you, as we are empty nesters. We do have a Costco membership, but not an executive one. I wasn’t sure if it would be worth it for us since we don’t shop there every month, but we do buy most all of our wine there and some large ticket items like tires, TVs and cell phones. I will ask the next time I am in about the rebate for not breaking even like you had mentioned in the article. This might make it worth it for us to get because the executive members here can get in the store in the morning earlier than the regular members. I concur with you that going near closing time during the week is the best time to go if you can’t get in early.
In Alberta, Canada we do not need a membership to shop for prescriptions at Costco and we do not need a membership to shop at the Costco Liquor Store which has a separate entrance adjacent to the large store. I check every year on membership renewal time to see if I spent enough to make the Executive membership worthwhile and if it isn’t, I ask for a refund of the difference. They are very reasonable to requests. Have never been denied it.
That’s good to hear that they would refund you the difference.