Saving Smart Spending

Is a Costco Membership Worth the Yearly Fee?

Erica Sandberg
Written by Erica Sandberg

Ask any of the millions of people who spring for a Costco membership if they like the retailer and they’ll more than happily tell you. In fact, chances are they won’t hold back with their enthusiasm and reasons. I asked for opinions on social media and here is just a tiny selection of real responses:

  • I’m huge fan. I love the toilet paper, peanut butter, the frozen prawns are amazing. I buy bulk chicken pieces and freeze them. It’s super helpful for family life.
  • They are great for liquor and diapers.
  • Costco is my Disneyland.
  • I love Costco!!!! Especially since I just found out deliver groceries
  • Costco is my happy place.
  • The Costco pharmacy is amazing. Their cap on cost extends to pharmaceuticals. Whenever I have to buy a medication that is not covered by our insurance I have it filled at Costco and it is always way cheaper than Walgreens.
  • Yes, love my Costco. Never drama when I need to return items — and don’t need receipts. I have even returned fruit or fish that has gone bad too early. Always buy my tires there, too. We even got our vacation package through them

In short, their passion is driven by low prices and easy returns. If you haven’t tried it out yet, you may certainly be tempted by now. Before you go, though, know that you can’t just waltz in and begin to shop. You’ve got to purchase a membership first. As of 2017, it is $60 per year for individuals and basic businesses.  

Obviously that fee would be a total waste of money if you never or rarely went to the place. True, you can come out ahead in just a single shopping trip and buy enough stuff that is at least $60 dollars cheaper than had you bought the items somewhere else. lIf not, there’s no point. It would be the same as eager work-outers optimistically signing up for a health club in January, then going once or twice but never again. Happens all the time.

So before considering a Costco membership[, be realistic. Ask yourself the following 5 questions:

  1. Will I get what I want and need cheaper at Costco? To know for sure, jump online and check out prices on things you commonly shop for on large web-based retailers. You may be surprised by the results. For example, the same tires at Costco are $166, but are $124 from Amazon. Other big box stores that don’t charge a membership fee (such as Target and Walmart) might have similar prices, too. For example, a Walmart sheet cake is around $16, just like Costco’s.
  1. Do I need such large quantities of products? Everyone has heard the jokes about the super-sized boxes of nuts and jars of mayonnaise. Funny, yes, but waste is not at all humorous. It is never a better deal if you toss the bulk of it away due to spoilage. Don’t forget storage, either. 30 rolls of paper towers takes up a tremendous amount of space. Consider where you might put such things.
  1. Is the closest Costco close enough? The nearer the store is to your home or place of work, the more likely it will be that you’ll jump in the car and go. If it’s geographically undesirable, you’ll be reluctant to drive the distance (in traffic, adding miles to the car, sucking up gas) and may opt for what’s nearby instead.
  1. Would I enjoy my shopping experience? While plenty of Costco shoppers have a blast pushing their giant carts through massive aisles, not everyone does. The crowds can be intense, and it’s got that warehouse feel, which is not to everyone’s taste. In fact, some people find it pretty miserable, even with the tables of delectable treats that are offered to hungry shoppers around every corner.
  1. Can I resist temptation? Another common drawback is that the deals can seem so fabulous that you can’t pass them up. Once you’re in, you might be tempted to overspend on things you don’t really need and definitely can’t afford. You may go in for a frozen lasagne and but leave with an oven. Know thyself. If giving in to temptation is your Achilles’ heel, you’re better off shopping at smaller, less seductive places even if the prices are a bit higher.

You wouldn’t be alone in deciding to shop elsewhere. Detractors also abound. Comments such as these were interspersed with the “loves”:

  • I gave up Costco because of the consumerism. 4000 (exaggeration, but not much) aspirin is just crazy. There is not enough choice, too much quantity, and I’m way past needing so many “things” and it’s a farce to pay money (entry fee) to spend money.
  • Don’t like at all. I think they are a ripoff.

Costco isn’t the only membership store out there, of course. It’s major competitor is Sam’s Club. Annual membership there starts at $45. per year. Consumer Reports found that prices and service were comparable between the two retailers, but Costco ranked a bit higher for quality products.

If you have a large family and require a substantial amount of food plus other stuff found at one of these membership stores, these retailers can absolutely make sound financial sense. As long as you answered yes to all of the five questions above, that is.

Still, you might not be out of luck if you answered no to some or all of the questions, or if you’re a party of one or two. In 2017, Costco alone had an astonishing 90.3 million members. So odds are high that you know someone who does have a membership. Ask to tag along on his next venture out. Add what you need to the cart, then repay that person right away. You may want to express your gratitude by buying him a massive hot dog and ice cream sundae from the concession stand. Both will set you back a couple of bucks. And they’re really pretty good.

About the author

Erica Sandberg

Erica Sandberg

Erica Sandberg is a freelance editor at large, reporter, and advice columnist covering all things fundamental finance. She’s been KRON-TV’s on-air money and credit expert for over 15 years, and has appeared on virtually every national news show, from Fox to CNN. She hosts Making it with Erica, a video program highlighting ways to live adventurously on any budget.


  • We do save big at Costco for a family of four. I have one issue and it is consistent with every Costco store nationwide, that is the terrible tasting carbonated sugar water down drinks. they are so diluted, I stopped drinking them. I wish they would taste the difference, if they need a larger profit, then charge an extra 10 cents to make the drinks taste like real soft drink like your Arby’s, Carls Jr, etc.

  • I am a family of one and I love Costco. Even shopping for one I save money. 5# bags of chocolate chips, nuts and other baking items during my baking season. Not to say the money I save buying my gas there, even though I have to drive 40 mins to get there, it is right around the corner from the VA Hospital, so it’s on my way and I fill up and shop. I like the larger quantities of chicken, fresh salmon and tilapia, which I freeze in servings. This saves me lots of time shopping and saves me money. I stagger the months so I only have to but one kind of meat per month, but I always have a variety in my freezer.
    So saying that it isn’t a good deal for a single person or a couple is wrong. If you plan, you can save a lot.

  • You completely missed one of the biggest reasons to join Costco. The gas prices. I have a Volkswagen with a 22 gallon tank that takes premium gas. I save anywhere from .80 cents to $1 per gallon vs my local gas station. Or roughly $20 on every fill up in my car. Filling my tank 3 times pays for my membership. For those who don’t need premium, the savings is still about the same.

    • No ending is correct. If you shop at Costco on a regular basis and take advantage of the other savings they offer, you can save big time. I received over $ 100.00 via Costco and by using the Costco visa I recently got back nearly another $ 400.00 from Citibank.

  • Very good article asking a very good question. Basically, I see it as the total cost of your annual spending at Costco would need to be greater than the annual membership fee in order for the membership fee to be justified, unless there are other indicators that makes one feel validated other than the savings.
    Thanks for sharing

Leave a Comment