We joined Costco for the first time last year. If you are not in the US, you might not know what Costco is, so here is a short intro. Costco is a membership only warehouse store that sells all kind of consumer products such as TVs, clothes, food, wine, and much more. Costco usually has lower price than other stores, but most of their products are sold in bulk. So instead of buying a small box of Cheerios, you have to buy a giant 2.5lbs size. You also have to be a member to shop at Costco.
There are two kinds of membership. The Goldstar membership costs $50 per year and you get the privilege of shopping at Costco. The Executive membership costs $100 and you get 2% reward on most purchases in addition. The price of membership is going up in 2012 to $55 and $110, respectively.
In 2011, we signed up for the executive membership because Costco promised that if we don’t get at least $50 reward, then they will make up the differences. We just received the 2% reward recently and our reward was $26. Luckily, I remember their promise and went to see customer service and they gave me $24 in addition to the reward. So the executive membership didn’t work out for us after all.
We just didn’t purchase enough to go over the $50 threshold. We would have to spend at least $2,500 a year to get over $50 reward to really benefit from the executive membership. I’m sure most people forget to go in and ask for the difference.
We joined Costco mainly because we wanted to purchase Kirkland brand baby formula. The Kirkland formula is much more affordable than national brands like Enfamil and Similac. Our cousin recommended Kirkland so we went with that and it worked out well. Once baby RB40 weans himself off formula, we probably will discontinue our Costco membership. The one benefit I would miss is their cheap gas station.
It was nice to shop there, but we just are not bulk buyers. Our condo does not have room for bulk items and our refrigerator is quite small. If we have a larger family in a larger home, then it would make more sense. It is fun to taste all the different food they have to offer, though. Costco has many tasting stations at lunch time to showcase their various packaged food products. That place is a zoo at lunch time. While their packaged food products are quite tasty, we prefer to cook from fresh ingredients, so we rarely buy their frozen food.
In conclusion, the executive membership is worth it for the first year as long as you remember to get cash back if your reward is less than $50 ($55 for 2012.) You will see how much money you spend at Costco in one year and you can adjust to the cheaper program or continue with the executive membership as you see fit. If you have a small business like a restaurant then I think the executive membership is definitely worth it.
Are you a Costco member? Did you pick the “Goldstar” or Executive membership? How much was your reward check this year?
If you’re going on a vacation this year check out the Barclay Arrival World Mastercard
- Earn 40,000 bonus miles if you make $1,000 or more in purchases in the first 90 days from account opening. 40,000 bonus miles equates to $400 off your next trip!
- $89 annual fee waived for the first year
- 0% introductory APR on purchases for the first 12 months after account opening. After that, variable APR, currently 14.99% or 18.99%, based upon your creditworthiness.
- Earn 2X miles on all purchases
- Get 10% miles back when you redeem for travel (i.e. redeem 40,000 miles for travel and get 4,000 miles back)
- Use miles for a statement credit toward any airline purchase to any destination with no seat restrictions and no blackout dates
- Easily redeem your miles for statement credits toward flights, cruises, car rentals, hotels and more
- Complimentary FICO® Scores as a benefit to active card members. Opt-in to have instant and convenient access to FICO® Scores from your Barclaycard online account.
If you don’t like annual fee, there is also a no fee version: Barclaycard Arrival World MasterCard® – Earn 1x on All Purchases. However, the signup bonus is 20,000 miles instead of 40,000 miles.
* update *
After weighing the pros and cons of Costco, we decided to cancel our membership. Baby RB40 is drinking whole milk now and Costco was not really needed anymore.
photo credit – wiki