Should You Finally Upgrade to a Costco Executive Membership in 2024?

One of the smartest personal finance decisions you might make is signing up for a Costco membership. Shopping at Costco could result in huge savings on items like groceries, household essentials, and larger purchases, like kitchen tools and electronics, when those things become a need.

Perhaps you've been a Costco member for years and have stuck with the basic membership. Right now, a basic membership costs just $60 a year, compared to $120 for an Executive membership. But an Executive membership offers one huge perk -- 2% cash back on all Costco purchases. If your Costco spending was pretty substantial in 2023, then now may be a good time to make that upgrade.

It's a matter of numbers

If you're on the fence about a Costco membership upgrade, one thing it pays to do is review your 2023 Costco spending and see what it amounted to. Assuming you're not anticipating major changes to your living situation or routine, your spending from 2023 is probably pretty indicative of what your spending might look like in 2024.

So let's say you spent a total of $3,600 at Costco last year. It takes $3,000 in annual spending to break even on the cost of an Executive membership upgrade, since 2% of $3,000 is $60. If you spent $3,600 in 2023, then you may want to move forward with an upgrade now. If you spent $2,950, you might still want to do the upgrade, since a single additional purchase this year could put you over that $3,000 threshold.

For example, you may decide to buy new furniture at Costco this year. Or, you may decide to use Costco to book a vacation. Either purchase alone could put you over that $3,000 target.

Similarly, you might decide to buy holiday gifts at Costco in 2024. That, too, could make a big difference in your Costco spending for the year.

Costco offers a no-risk proposition

You may be hesitant to shell out an extra $60 for a Costco membership when the basic version costs so much less and seems to be meeting your needs. But here's a lesser-known secret: Costco will make you whole financially if you don't accrue enough cash back on your Executive membership to cover the cost of the upgrade.

In other words, let's say you upgrade to an Executive membership but only spend $2,400 this year. That amounts to $48 cash back. At that point, if you choose to go back to the basic membership, Costco will allow you to do so, and it will also refund you the $12 of that upgrade fee you didn't make back. So all told, you're not really losing out on any money.

Now, if your circumstances are changing this year -- say, you're moving so you won't be as close to a Costco store -- then you may not want to upgrade your membership because it's likely you'll shop at Costco a lot less. But otherwise, it's something to consider -- because it could end up working out well for you financially.