The Easy Way to Score 4% Back on Your Costco Purchases

I know a lot of people who pretty much only buy groceries and household supplies at Costco. But my Costco shopping list tends to be far more extensive. I buy everything from fruit to toilet paper to socks to holiday gifts at Costco. And as such, I'm always looking for ways to save money on my purchases.

Years ago, I discovered a really easy way to get 4% back on pretty much everything I buy at Costco. Here's how.

Combine the right credit card with the right membership

Several years back, I decided to apply for the Costco Anywhere Visa® Card by Citi. The credit card is loaded with perks, like 4% cash back on gas fill-ups (something my minivan requires plenty of) and 3% back on restaurants.

But just as importantly, the Costco Visa Card gives you 2% back on your Costco purchases. And that includes items you buy online.

I also happen to like the fact that the Costco Visa Card serves as your membership card for Costco itself. It's one fewer card to keep track of.

So where does my other 2% back on Costco purchases come from? That would be my Executive membership.

Note that I pay a higher annual fee for that membership (whereas my Costco Anywhere Visa® Card by Citi is a no-fee card). A basic Costco membership costs $60 a year, but I pay double for my Executive membership. But in reality, that membership pays for itself.

I typically spend about $100 a week on Costco shopping. So that's over $5,000 annually right there, not including larger one-off purchases I might make. Since 2% back on $5,000 is $100, I make back my $60 upgrade fee and come out ahead financially with an extra $40 or more in my pocket.

Should you follow my lead?

My tactic for scoring 4% back on my Costco purchases isn't rocket science. So if you shop at Costco a lot, it could pay to upgrade your membership to the Executive version and also apply for the Costco Visa Card.

That said, there are some situations where you may want to hold off on a new credit card. If you're gearing up to get a mortgage, you may want to wait until that loan closes before applying for more credit of any kind. And if you're already juggling a lot of credit card debt, getting a new card may not serve you well, despite the cash back you can get at Costco.

Otherwise, there's no reason not to try to score as much cash back on your Costco purchases as possible. And if you're worried your Executive membership won't pay off, consider that you break even on your $60 upgrade fee at the $3,000 in spending mark. So if you spend $100 at Costco every other week, that's $2,600 -- and from there, all it takes is one or two larger, one-off purchases to go beyond that threshold.

Plus, the nice thing about the Executive membership is that it's pretty much risk free. If you don't rack up enough cash back to make it worth it, you can downgrade to a basic membership and Costco will pay you the difference.

As an example, if you only manage to snag $50 cash back after a year, Costco will refund you $10 at the time of your downgrade. So there's little to lose and a lot to potentially gain.