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Costco and Sam’s Club share a number of similarities. Not only are their business models comparable, but both stores offer a world of savings on groceries and household essentials. Plus, both warehouse clubs offer a basic membership and an upgraded one that comes with cash back on purchases.
But there’s already a difference in cost between Costco and Sam’s Club. And once Costco’s latest fee hikes take effect on Sept. 1, that difference will be even greater.
Right now, it costs $60 a year to join Costco as a Gold Star member, versus $50 for Sam’s Club. On Sept. 1, the cost of that basic Costco membership will increase to $65, marking a $15 difference from Sam’s Club.
Meanwhile, the current $120 Executive membership fee is rising to $130 in September. That will make the cost of an upgraded Costco membership $20 more than the $110 Plus membership at Sam’s Club.
Given the difference in price, you may be inclined to switch from Costco to Sam’s Club. But is that the right move? It depends.
It’s a matter of accessibility and convenience
You may be fortunate to have both a Costco and Sam’s Club store conveniently located to where you live. And it may be that based on your shopping needs, you’re able to enjoy comparable savings at both stores. If that’s the case, and there’s really not a clear benefit to sticking with Costco, then it could pay to switch over to Sam’s Club for the savings on your membership fee.
However, if you’re happy with your Costco membership and are used to shopping there, you may want to stick with it if you can afford the higher cost. And you should especially consider staying with Costco if it has a store location that’s much closer to your home than Sam’s Club.
The best way to get value out of a warehouse club membership is to use it regularly. The more money you save on purchases during the year, the easier it becomes to recoup your membership fee and then some. And if you have an upgraded membership that gives you cash back, the more you hit the store, the more of that you’re apt to rack up.
So even though Sam’s Club costs less, if its closest warehouse club is 20 minutes away but you’ve got Costco seven minutes down the road, Costco is probably the better choice by virtue of that alone. And even if it’s reasonable to make a 20-minute drive, it’s okay to pay a bit more for the convenience of driving less.
One reason you may want to switch
All told, if you’re happy at Costco and it’s more convenient, then you shouldn’t necessarily let the extra money drive you away unless there’s an issue with affording the membership fee. But if you pay for an upgraded warehouse club membership, then here’s one good reason to consider a switch to Sam’s Club.
With a Plus membership at Sam’s Club, you get early access to the store. That used to be a perk of Costco’s Executive membership, but it no longer is.
If you don’t enjoy battling crowds, then there’s a huge value in getting into Sam’s Club before it opens to its general membership base. So that could be a reason to consider a move on top of the $20 difference in membership fees.
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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.
