2 reasons why Costco Executive is more popular than Gold Star

Starting September 1, 2024, shopping at Costco will become more expensive. Rates for both membership levels will increase — it will cost $65 per year for a Gold Star membership and $130 per year for an Executive membership.

When Costco announced the increase, it also gave us some interesting information, such as that there are approximately 52 million current members. Perhaps more interesting is that “just over half” of the members are executive members.

Given that Executive members cost twice as much as a regular Gold Star membership, why did so many people upgrade? There are two main advantages to an executive update — although most members are probably more inspired by the first than the second.

1. 2% Costco Reward.

Probably the main reason to upgrade to an Executive member is the 2% Costco Reward. Executive members earn 2% back on their Costco purchases, including on costco.com and Costco Travel.

Here’s what 2% back could look like based on your Costco spending:

Data source: author’s calculations

2% back is paid as a lump sum reward once a year. You can use Rewards on Costco purchases, including your annual membership fee. The 2% reward is limited to $1,250 (as of September 1) per year.

Pro tip: The 2% cashback you earn is separate from any other coupons or rewards. So be sure to stack it with a good Costco rewards card to maximize your return.

2. Discounts on Costco services

Costco offers a variety of services beyond stocking its regular warehouse shelves. This includes everything from pet and home insurance to garage door or cabinet installation.

All members have access to these services — and some general discounts — but executive members often get additional perks. Here are just a few examples:

• $15 enrollment fee waived for Fido pet insurance through Costco

• Free roadside assistance with car insurance through Costco

• Free home window repair/replacement with home insurance through Costco

• No application or statement fees for payment processing services through Costco

To be clear, insurance benefits only appear when you purchase your policy while logged into your Costco account and using the links on the Costco service pages. You can’t just apply them to your existing outside insurance.

The story continues

Bonus reason no. 3: Stop asking you to upgrade

Okay, so this is a bit tongue-in-cheek, but it could definitely be a factor for a lot of people: once you upgrade your membership, the front desk workers will no longer ask (occasionally ask you?!) to do upgrade.

Now you can check in (relatively) peace. Enjoy the quiet.

Is an executive upgrade worth it to you?

While the various additional service discounts may be handy for some members, most people upgrade to Executive for the 2% Reward. So, to figure out if an upgrade is right for you, all it takes is looking at how much you spend at Costco each year.

As the table above shows, you need to spend $3,250 per year to get $65 back. You’d have to spend $8,250 during the year to get $135 back.

In other words, an annual expense of $3,250 would pay for the upgrade to Executive from Gold Star. If you spend more than that each year at Costco, then an upgrade might be a good move for your budget. If not, then keep your Gold Star membership (assuming you get value out of it).

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We firmly believe in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved or endorsed by the advertisers included. Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool’s editorial content and is created by a different team of analysts. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Brittney Myers has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and JPMorgan Chase. The Motley Fool has a disclosure policy.

2 Reasons Costco Executive Is More Popular Than Gold Star was originally published by The Motley Fool