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Many people are more than willing to pay a fee to get access to Costco stores. For $60 a year for a Gold Star membership (soon to be $65) or $120 for an Executive membership that gives you 2% cash back (soon to be $130), you can enjoy not just a host of affordably priced grocery and household items, but additional perks like access to travel packages, cheaper fill-ups for your car, and more.
But some people don’t like the idea of having to spend money just to be able to shop at a store. And technically, you can get away with shopping at Costco for almost an entire year without paying a dime. But whether you should employ this trick is a different story.
How Costco membership fee refunds work
Anyone can shop at Costco.com. So if you don’t want to pay for a membership, it’s not a problem to use the site. It’s only the actual stores where you need a membership to get in.
However, non-members using Costco.com pay a 5% surcharge so that for every $100 you spend, you’re charged $105. And certain online items are members-only, so you won’t be able to buy anything with that designation if you don’t enter a member ID number at checkout. That said, you technically can pay for a Costco membership upfront, use it for most of the year, and cancel it a day before the one-year mark.
See, Costco has an extremely generous refund policy that extends to not just its inventory, but the memberships it sells. If you’re unhappy with your membership, you can cancel at any time for a full refund. So if you cancel before the full one-year mark, you can get your money back after having enjoyed Costco access for 364 days.
Why you shouldn’t abuse Costco’s membership refund policy
Costco may have a generous refund policy, but it’s not stupid. The warehouse club giant is aware that customers may try to game the system by canceling their memberships at the last minute and then attempting to renew right after.
Often, what’ll happen is that Costco will impose a waiting period from when you cancel your membership to when you can reactivate or apply for a new one. This can vary.
There are stories of people being told they have to wait 18 months until they’re able to join Costco again. However, if there was a reasonable explanation for your cancellation, such as having lost a job, you may get more leeway to renew sooner or right away. But if you cancel your membership at the 364 day mark, don’t expect Costco to let you renew a day or so later.
For this reason, you may not want to cancel your membership after almost a full year, even though you’re technically allowed to. Doing so could mean cutting off Costco access for longer than you wish.
Plus, you should know that Costco uses its membership fee revenue to offset its costs and pass savings onto its customers. If you game the system by intentionally canceling your membership after almost a year, you’re basically hurting your fellow shoppers who are paying for access to the store.
And sure, you can argue that your $60 or $120 isn’t going to make or break Costco’s bottom line. But if thousands upon thousands of people take that attitude, then it could have an impact, resulting in higher prices for the people who pay for Costco and need the grocery savings to be able to put food on the table. So before you decide to try to eke out a free year at Costco, think about whether that’s really the decent thing to do.
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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.
