You're Guaranteed Not to Lose a Dime on a Costco Executive Membership Upgrade. Here's Why

Whether you're brand new to Costco or have been a member for quite some time, you may be thinking of upgrading to an Executive membership. The Executive membership costs $120, which is $60 more than the basic membership.

But there's a big perk that often makes the Executive membership worth it -- you get 2% cash back on your Costco purchases, including those made online. During a year, you might easily recoup your $60 upgrade fee and end up with extra money in your pocket.

What if you're not sure the upgrade is a good idea, though? If your Costco shopping tends to be spotty, you may not earn enough to make back your $60. So is it worth taking the risk?

The answer is a resounding yes. And the reason is that you're actually guaranteed not to lose any money on a Costco Executive membership upgrade.

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Costco's extremely reasonable policy

If you spend more than $3,000 a year at Costco, then upgrading to an Executive membership makes financial sense. That's because 2% of $3,000 is $60, which is the exact cost of your upgrade.

So let's say you only spend $3,050 a year at Costco. With an Executive membership, you're getting $61 back, so you're officially $1 ahead. And while that's hardly a life-changing amount of money, it's still money.

Plus, you might spend a lot more than $3,000 in a year at Costco, especially if you tend to go there several times a month. If you have a year when you spend $5,200, or $100 per week, you get $104 back in your pocket with an Executive membership. Even when you subtract the $60 upgrade fee, you're $44 ahead.

The so-called risk of upgrading, however, comes into play when you're not sure you'll exceed or even hit the $3,000 mark. If you only spend $2,500 at Costco the year after upgrading to an Executive membership, you're only looking at getting $50 back. So in that case, you're down $10.

But actually, you're not. See, one lesser-known Costco rule is that if you get the Executive membership but don't earn enough cash back to recoup your $60 upgrade fee, Costco will allow you to downgrade your membership to a basic one and refund you the difference in cost.

In this example, you'd get $10 back at the time of your downgrade. So all told, there's no financial risk to worry about.

You may be surprised at how much cash back you can earn

If you shop at Costco a few times a year and rarely exceed the $1,000 mark in spending, then you probably know off the bat that an Executive membership upgrade doesn't make sense for you. But if you shop at the store frequently, then you may be surprised at how much cash back you can earn in a year.

Remember, too, that planning to make a larger one-off purchase or two could really make the case for upgrading to an Executive membership.

If you think you might book a vacation through Costco Travel, or if you've planning to buy a new TV at Costco in the next year, then getting the more expensive membership could make sense.

And even if you don't end up making your money back naturally, you're guaranteed to be made whole financially by Costco one way or another.