This Costco Membership Upgrade Comes With Big Perks and No Risk

If you shop at Costco fairly often, you may be tempted to upgrade your membership from a basic one to an executive one. The cost of an executive membership is double that of a basic membership -- $120 a year versus $60. But in exchange, you'll get the opportunity to score 2% back on your Costco purchases, including those made online.

All told, you'll need to spend more than $3,000 in a single year to make the upgrade to an executive membership worth it financially. That's because it'll take $3,000 in spending to get your $60 upgrade fee back. And only once your spending exceeds that point will you come out ahead in the form of cash back.

If your Costco spending hasn't been so high in the past, you may be hesitant to pay for the upgrade. But here's why you should.

It's a no-risk proposition

You may be leery about upgrading your Costco membership because you don't want to spend an extra $60 to only get, say, $20 back. But one thing you should know is that if the executive membership doesn't end up working out for you financially, Costco will make sure you're not out any money.

Costco will allow you to cancel your executive membership and downgrade to a basic one when you want to. And it will also pay you the difference if you don't manage to accrue enough cash back via your executive membership rewards to make up for that $60 investment.

So, let's say you upgrade your Costco membership to an executive one at the start of the year, and then throughout the year, you only spend enough at Costco to accumulate $40 in executive membership rewards. If, at the end of the year, you want to downgrade your membership to a basic one, Costco will allow you to do that, and it will also pay you the $20 you didn't make back in rewards. So all told, you won't be out any money.

An option worth pursuing

When you buy an executive membership, your credit card will be charged the extra $60 at the time of your upgrade. So you'll be shelling out that cash upfront. But if you don't earn at least $60 back in rewards, you'll get paid the difference. As such, it pays to upgrade your membership and see what happens.

You might end up spending enough money to accumulate more than $60 in rewards. This especially holds true if you end up booking travel through Costco, since that can be a large expense that counts toward your executive membership rewards. Similarly, if you buy furniture or appliances at Costco, those larger purchases, too, will count.

But you can rest assured that Costco will make it so that you at least break even between your annual executive membership rewards certificate and whatever refund it issues you. When you think about it that way, there's really no reason not to give an executive membership a try.