3 Signs a Basic Costco Membership Is Best for You

I had a basic Costco membership for several years before making the decision to upgrade to an executive one. What prompted me to pay for the upgrade was that the executive membership gives you 2% back on all Costco purchases, including online purchases and travel.

Now the executive membership costs $120 a year, whereas a basic membership at Costco only costs $60. In exchange, you get 2% cash back on all Costco purchases with an executive membership.

If you're going to spring for the upgraded membership, it's important to be able to put it to good use. Here are a few signs that a basic membership may actually be your better bet.

1. You don't have many people in your household

My family consists of two adults and three school-aged children. So for us, it's easy to justify the cost of an executive membership. Since we do a lot of food shopping and cooking, we're able to use our Costco membership often.

But let's say you have a household of just one or two. Chances are, you won't be buying the same amount of food and supplies as a larger family. So in that case, a basic membership might meet your needs.

2. You don't have a lot of storage space at home

In my house, I have a regular fridge/freezer in my kitchen, and a chest freezer and second fridge/freezer combination in my basement. I also have a basement with multiple storage closets, as well as a garage with lots of shelving. Because of this, I'm able to store bulk food purchases and household products without running out of space or having to stash boxes of chips in my bedroom.

But if your home does not offer much in the way of storage, then you may be limited in what you can buy at Costco. And if that's the case, then an executive membership may not pay off for you.

You should especially be careful with perishable Costco purchases if you don't have a lot of fridge or freezer space. This isn't to say that you need a spare one like me to buy food in bulk. But be mindful of the room you do have so you don't end up throwing your money away.

3. You don't have a Costco warehouse club store nearby

I happen to have not one, but two Costco warehouse club stores within 15 minutes of my house. But if you don't live anywhere near a Costco, then you may not get over there all that often. If that's the case, then you may find that a basic membership is your better bet.

For many people, an upgraded Costco membership makes financial sense. Basically, if you spend $3,000 a year at Costco, your executive membership pays for itself, because at 2% back, you'll recoup the extra $60 you're spending. And for every dollar you spend beyond that, you come out ahead financially with the executive membership.

But if the above signs apply to you, you may not hit the $3,000 spending mark at Costco in a year. And in that case, you might as well save your extra $60 and stick with a basic membership.