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3 Things You Probably Don’t Know About Your Costco Executive Membership

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When you join Costco, you have a choice. You could pay for a basic membership that will cost you $60 a year, or you could upgrade to an Executive membership for $120.

The Executive membership might cost double, but a major benefit is that it gives you 2% cash back on your Costco purchases. So if you use your membership often enough, you might easily make back the $60 upgrade fee via the cash back you accumulate.

But whether you’re new to having an Executive membership or you’ve held one for years, you may not be totally familiar with how the program works. Here are some surprising aspects of the Executive membership you should know about.

1. There’s a limit as to how much cash back you can accumulate

As mentioned, with an Executive membership at Costco, you get 2% back on your purchases. Spend $1,000 in the course of a year, and you’ll have $20 coming your way.

But there’s a limit as to how much cash back you can rack up from that membership each year, and it’s $1,000.

Before you get too bummed, though, realize that to accumulate $1,000 in cash back, you’ll need to spend $50,000 per year at Costco. Even if you shop at the store regularly, and even if you end up making a few larger purchases during the year, chances are, you’re not going to end up with a $50,000 tab. So the fact that your cash back is capped at $1,000 shouldn’t be a huge deal.

2. Not every purchase gives you 2% back

Many of the items you purchase at Costco are eligible for cash back with an Executive membership. These include groceries, electronics, and even travel packages.

But there are certain items that won’t give you cash back with an Executive membership. These include cigarettes, alcohol, postage stamps, and food court purchases (sorry, you won’t get a kickback from your $1.50 hot dog and soda combo).

You may also be surprised to learn that gas purchases at Costco aren’t eligible for cash back with an Executive membership. However, if you fill up using a credit card offering cash back at the pump, you’ve solved that problem.

3. Costco will make you whole if your Executive membership doesn’t pay off

To break even on the cost of upgrading your Costco membership, you need to spend $3,000 in a year — because 2% of $3,000 is $60, which is the price difference between the basic membership and the Executive one. So once you’ve spent just $3,001, you’re ahead financially with the Executive membership.

But if you have a year when you don’t spend $3,000 at Costco to break even on your upgrade cost, don’t sweat it. Costco will make you whole if you choose to downgrade to a basic membership by paying you the difference between the cash back you racked up and the $60 upgrade fee.

For example, let’s say you spend $2,400 at Costco with an Executive membership one year and get $48 back. If you decide that the higher-cost membership isn’t worth it to you, just go to customer service and ask to downgrade, and they should give you the $12 difference.

So all told, there’s really no risk in paying the extra $60 for an Executive membership, because you’ll get your $60 back either way.

Whether you already have an Executive membership at Costco or are thinking of signing up for one, it’s important to know how the program works. Keep these lesser-known points in mind as you make your decision.

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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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