Joining a warehouse club store like Costco or Sam’s Club has the potential to save you a lot of money. And you might add to your savings by upgrading your membership beyond the basic offering.
A basic (Gold Star) membership at Costco costs $60 a year, vs. $120 for an Executive membership. At Sam’s Club, you’ll spend a little less — $50 for a regular membership and $110 for a Plus membership.
But there’s a reason I think Costco’s upgraded membership has a slight edge over Sam’s Club’s Plus membership. That said, the Plus membership at Sam’s Club comes with a nice perk I wish Costco would bring back for Executive members.
Why Costco’s upgrade wins out — but barely
What gives Costco’s Executive membership a slight edge over Sam’s Plus membership is that it offers an opportunity to earn double the cash back. Both memberships give you 2% back on your purchases. But with the Executive membership, you can earn up to $1,000 back per year. With the Plus membership, your cash back maxes out at $500.
Now to be clear, it takes a lot of spending to meet either threshold. To get $500 at Sam’s Club (or Costco, for that matter), you need to spend $25,000. To get $1,000 back, you need to spend $50,000.
Most people aren’t spending these amounts. But there can be exceptions. In fact, one year, I came close to spending over $25,000 at Costco because I booked an expensive vacation package (it wound up getting canceled due to COVID-19, but that’s a different story).
I do a Costco shopping run every week, and I commonly spend $100 to $200. If we split the difference and call it a $150 line item my budget, that’s $7,500 a year (I’m assuming 50 weekly shopping trips). But I also make a lot of Costco purchases for volunteer groups I work for. I’m reimbursed for those, but I still get the Executive membership credits, so to speak. And those can easily come to $2,500 or more, because they’re usually associated with big events I’m running.
So all told, that’s $10,000. If I book a $15,000 vacation through Costco (which is what I may be looking at for a land and sea package to Alaska to make up for the 2020 trip I didn’t get to take), that’s $25,000 right there.
But then, if I make a few one-off purchases on top of that, like buying a new laptop or loading up on holiday gifts, I’m beyond the $25,000 mark at Costco. So it helps that I’m not limited to just $500 cash back with my Executive membership.
Though I’ve never come close to getting the full $1,000, I can imagine a scenario where I might get, say, $550 back one year. Even when we account for the fact that the Executive membership costs $10 more than the Plus membership, there’s still some financial upside.
One great feature of the Plus membership you won’t find with the Executive membership
Although an Executive membership through Costco can put the most cash back in your pocket, one benefit of the Sam’s Plus membership is getting access to early shopping hours. This used to be a feature of the Executive membership, but Costco did away with that perk years ago.
For a person like me who hates crowds, it would be great to see Costco bring that benefit back. But it’s not worth giving up my Executive membership — and the extra money it could net me — to get in the store a bit early.
Plus, from what I’ve heard from friends with the Plus membership, Sam’s Club, like Costco, is pretty crowded all the time anyway. So the absence of that perk may not be such a big deal.
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