With a Costco just a mile away from me, and with their generous samples to please my fussy toddler on rainy a Seattle afternoon, it’s a no-brainer that a Costco membership is a good value for my family. But if you’re not sure that a Costco membership makes financial sense for you, check to see if any of these ideas will net you the savings you need.
A Gold Star Costco membership (available to anyone) currently runs you $55 a year, which includes a second card for another member of your household (an adult over 18 at the same address).
Here are 10 ways to make your Costco membership worth it:
An Executive membership is $110 per year, but nets you 2% back on all Costco purchases. Bargain Babe breaks down the numbers here on whether a Costco Executive membership is worth it.
1. Groceries and common household goods. You need to save $4.58 a month to make your annual membership pay off (that’s your $55 membership fee divided by 12 months). So if a box of cereal is $1 cheaper at Costco, buying 5 would save you $5, and bingo! You’ve made your money back this month.
You can find $5 in savings (or $4.58 to be more exact), for other grocery and household items, too. Make a list of staples you use frequently (shelf-stable foods, office supplies, perishable items that you have space to store and use before they go bad). Take your list to the grocery store and write down the prices, then compare to Costco. How much do the savings add up to? Which items are cheaper at the grocery store, taking into account the sales and coupons you will be able to use?
TIP ==> A recent Trefis analysis reported Costco’s markup is around 15% while many supermarkets and departments stores have markups of 25% or more. But that doesn’t mean everything at Costco is a better deal.
If you can’t wring $5 a month in savings on Costco groceries, we found 9 more ways to save money.
2. Fill your tank. If there’s a Costco near your home or office, buy gas there. Yes, there’s often a line, so this does take a time commitment and some planning ahead. But at our Costco, gas is regularly around 10 cents a gallon cheaper than the nearest competitors. My husband fills up about every 10 days (8 gallons in a Prius) and I fill up about every 20 days (10 gallons in a Civic). So he buys about 300 gallons of gas and I buy about 180 gallons, for a total of 480 gallons per year.
At 10 cents/gallon savings, we save $48 a year on gas alone, which almost pays for the membership. But on top of that, with our Costco AmEx (see No. 3) we get 3% back (to spend at Costco) on all gas purchases. That 3% savings on 480 gallons a year puts roughly another $50.40 back in our pockets.
The gas savings alone pays for our membership and then some.
3. Get a credit card. If you are looking for an American Express card, the Costco TrueEarnings AmEx has no annual fee when you’re a Costco member. Since a basic AmEx membership is usually around $75/yr, your membership has paid itself off before you even start shopping. But the card also comes with cash back (in the form of a Costco gift certificate, basically, and must be spent at Costco). For a Gold Star member, you get 3% cash back on gas (at Costco or any other gas station), 2% on travel and restaurants, and 1% on all other purchases (both Costco purchases and all others).
4. Give gifts, or go out on the town yourself. Costco sells gift certificates, many at a 10-20% discount, and often to local restaurants and attractions as well as national ones. For example, you can get $100 worth of certificates for Wolfgang Puck restaurants, McCormick & Schmicks, or the Coffee Bean & Tea Leaf for $80 (they usually come in packs of smaller denominations, such as two $50 gift cards, for more flexible gifting). Or you can get 10 AMC movie passes for $85 ($8.50 per ticket), which is about 30% savings off the price of a non-matinee showing.
Like movies? Make your membership fee back by seeing one movie a month.
5. Tires. In comparisons, Costco is consistently noted to have good prices and a comprehensive warranty and package (rotation, balancing, disposal of old tires), as well as frequently offering rebates (two weeks ago we got $70 off) on a set of four new tires. Caveat: they may rotate your tires for free but do not take appointments, so if you go on a weekend you’re likely to spend a few hours waiting. You may be better off rotating your own tires or having it done with each oil change. While you could easily save your membership fee in one new purchase of new tires, you definitely still want to call around for the best price on tires in your size.
7. Electronics. While selection may not be as robust as at Best Buy, Costco carries both big-ticket electronics items and smaller everyday items at significant savings (see Cheapism’s sample price comparison, including a Panasonic 32″ LED TV for $249, vs. $349 at Best Buy). If you’re in the market for a new TV, computer, or camera, you could save your membership fee on that one item — plus, they extend the warranty to two years on many of their electronics. Costco has also recently begun selling Apple products, and while they are not allowed (by Apple) to sell them for cheaper prices, they generally will throw in an iTunes gift card worth $20-50 (depending on the price of the item) to sweeten the deal.
8. Alcohol. If you prefer your wine somewhere in the $15-25 range, Costco has a good selection of highly rated wines at a savings of $4-5 off per bottle. You can get similar savings on bottles of name-brand alcohol (or save even more on Costco’s Kirkland Signature brand) or cases of beer and cider.
One bottle of wine a month justifies your Costco membership fee.
9. Throw a party. OK, so if you throw a party just for this reason it may defeat the purpose of saving money… but if you ARE throwing a party, or a BBQ, or hosting a holiday, and you purchase your supplies at Costco, you’re likely to recoup your membership fee in just 1-2 events. That’s because you’ll be take complete advantage of buying in bulk and won’t have to worry about your hummus, chips, or meat going bad. Costco also has significant savings on paper goods, like plates and cups.
10. Eat your weight in samples. Maybe not the most efficient way to do it, but fun! If you snack off Costco’s free samples enough to stave off lunch once a month, you’ve easily made back that $4.58 per month that it takes to earn back your membership fee.
BONUS. Costco offers a money-back guarantee even on their memberships. You can cancel it at any point in time during the year and get a full refund if you don’t find that it’s working for you.
TIP ==> For the same price ($55/yr) Costco also offers a Business membership. It allows you to resell products that you purchase, and allows you to purchase business memberships for up to six additional cardholders (but still at $55/year per additional cardholder, though each also includes one free household member).
Cons of a Costco membership
- Long lines, especially if you can only shop on the weekends.
- Employees are hard to track down for help.
- Temptation to buy more than you need – it’s not a coincidence that the carts are HUGE!
- Storing all the stuff you buy.
- Wasting money because food went bad.
- What would you add to this list?