Here's How to Get Costco to Give You Back $100 per Year

When I first joined Costco, I insisted on sticking to a basic membership for quite some time. The concept of having to pay money to get access to a store was foreign to me. And back then, my husband and I didn't have kids and didn't have the same need for bulk food purchases we do now. So the basic membership made sense.

But at some point a long time ago (because yes, we've been Costco members for that long), we decided to upgrade to the Executive membership. As a result, we now pay $120 a year for Costco access, as opposed to $60 for a basic membership.

But that extra $60 a year is worth it. We're able to make that money back and then some through one key feature the Executive membership offers.

How does extra money sound to you?

The primary benefit of an Executive membership at Costco is that you get 2% cash back on your purchases. Now, there are some exceptions -- for example, when you fill up your car, those gas purchases won't count.

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But most of the things you buy at Costco or on Costco.com are eligible for cash back with an Executive membership. That includes travel packages, which can be thousands of dollars. If you shop at Costco regularly like I do, then it could pay to run the numbers and see if an Executive membership makes sense. It might easily put $100 back in your pocket each year -- or more.

I shop at Costco every week. And most weeks, I'm spending at least $100 because I buy a lot of my family's groceries and household supplies (like laundry detergent, tissues, and cleaners) there. If we multiply $100 by 50, we get to $5,000. And 2% back on that sum is $100. So if you're like me, and you spend about $100 at Costco most weeks, then the Executive membership upgrade makes sense.

In fact, the upgrade makes sense once your yearly Costco spending exceeds $3,000. The reason is that 2% back on $3,000 is $60, which is the exact cost of the Executive membership upgrade. Once you're beyond that point as far as annual spending goes, it pays to get the pricier membership.

It's pretty common for me to get at least $100 back from Costco each year from my Executive membership. Even when I subtract the cost of the upgrade -- $60 -- I'm gaining something financially. Usually, that "something" is at least $40 or so, which isn't bad at all considering that it's basically free money.

It's a no-risk proposition

Clearly, there's much to be gained from an Executive membership at Costco -- especially if you enjoy racking up cash back. But the risk, of course, is that if you don't end up spending $3,000 in a year, you've lost out financially by paying the extra $60.

However, that's actually not a risk thanks to a lesser-known Costco rule. If you decide you don't want to keep your Executive membership and you downgrade to a basic one after a year, Costco will see how much cash back you racked up. And if you didn't rack up at least $60, Costco will pay you the difference at the time you switch over to a basic membership.

So as an example, say you only spend $2,500 your first year after upgrading your membership. That puts $50 back in your pocket. If you downgrade your membership, Costco will refund you $10 so you're made whole on the upgrade fee. It doesn't get more reasonable than that.

Because of this, I'd encourage you to spring for the Executive membership if you're a frequent Costco shopper. There's a good chance you'll score some nice cash back. But if not, Costco's got you covered no matter what.