What You Should Know Before Upgrading Your Costco Membership

Costco is a retail warehouse club that consumers are eager to join. Members take advantage of the economically priced, in-store Kirkland brand, discounts on items like  jewelry and housewares, everyday household groceries and staples sold in bulk, and of course, a food court that has you queuing up every time you make a run to stock up.

It is also a retailer where membership has its privileges. There are two different levels of membership at Costco. The Everyday Gold Star level will run you $60 annually, and will provide you with two membership cards and access to both their warehouse and online shopping. At $120 annually, the Executive membership gets you the same perks provided by the Everyday Gold Star membership, but you also get extra discounts, along with 2 percent cash back on eligible purchases, up to $1,000 per year (via Costco). 

The question that often comes up when trying to decide between the two is whether or not the upgrade to Executive membership is worth the extra $60. The answer is not so clear-cut and may require a little bit of thought and analysis on the part of the card holder to determine which level is best for your household. Here's what you need to consider:

Do you spend enough money to make the upgrade worth it?

The biggest question you should be asking yourself is how much you spend on a monthly basis at Costco. The warehouse retailer has created a nice chart to help you figure out which membership best fits your lifestyle. If, on average, you spend at least $250 a month, before taxes, then you will ultimately spend $3,000 over the course of year. That means you will earn back $60 of your membership fees. If you spend twice that annually, you will break even. In order to hit the $1,000 reward, you would have to spend $50,040 in the course of a year at Costco. And it's important to note that if you upgrade your membership mid-year, your purchases you made while a Gold Star Everyday member do not count towards helping you rack up points for your Executive membership rewards. 

What purchases count or don't count towards your rewards? You should check with your local Costco, because in some cases it varies, depending on which state you live in. Trips purchased through Costco Travel count towards your rewards once travel is completed. The site also states that if you are a member in the United States you do not get rewards on purchases of cigarettes or tobacco-related products, gasoline, Costco Shop Cards, postage stamps, alcoholic beverages in certain states, or at the food court (according to another page on the Costco website).