Is a Costco Executive Membership Worth It for a Family of 2?

Recently, my spouse and I were checking out at Costco when we were flagged by an employee as good candidates for the Costco Executive membership -- you know, the membership that costs twice as much as a Gold Star but earns 2% back on all Costco purchases (up to $1,000 in rewards per 12-month period).

She offered us the Executive membership for $50, which on top of the $60 we already paid for the Gold Star membership, would make our annual Costco membership $110 -- $10 cheaper than if we had purchased the $120 Executive membership outright. What's more, she said Costco would refund the $50 if we didn't get at least $50 in cash back during our first year.

We signed up. But it got me thinking -- is an Executive membership really worth it for two people? Let's take a look.

You have to earn at least $60 back

On paper, a Costco Executive membership is definitely worth it if you and your partner can earn back at least the price of your annual membership dues. In my case, the difference between Gold Star and Executive was $50, but usually it's $60.

Since you earn 2% cash back with an Executive membership on Costco purchases (up to $1,000 in total rewards), you would need to spend at least $3,000 per 12-month period at Costco to earn $60 back, which comes out to $250 per month. We spend about $350 at Costco each month, so the membership could save us money, as we would earn $84 on our annual spending -- or $24 after we factor in the $60 membership dues.

For perspective, here's how much you can earn for different monthly and annual spending.

In addition to the 2% back, an Executive member also gets access to special perks, such as free roadside assistance with Costco auto insurance, additional travel benefits, and lower prices on check printing, car buying, and water delivery.

Now, to be fair, these perks aren't especially compelling to me, as I don't have car insurance through Costco nor do I write many checks. But they might add additional value to you, if you're already using some of these services.

It won't hurt to try the Costco Executive membership

The good thing about an Executive membership at Costco is that if you're unsatisfied, you can downgrade at any time and get a prorated refund. So if you decide after six months that you don't like the Executive membership, Costco will give you $30 back and leave you with the Gold Star membership again.

That said, you really don't have any reason to downgrade. If you don't earn enough cash back to pay for the membership, Costco will automatically refund you the difference. So if you only earn $30 after one year of shopping with an Executive membership, Costco would put another $30 in your voucher.

So it really doesn't hurt your personal finances to try. The best outcome is that you'll earn enough cash back to more than pay for the membership, plus get access to special discounts and deals you won't find anywhere else. The worst outcome is that you get refunded for your membership, which is basically the same as the best outcome. As for my family of two -- we're almost a family of three, so we're pretty confident this membership will pay for itself.