Costco Executive Membership: How Much You Really Need To Spend To Break Even

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Costco provides some incredible discounts, that's for sure. However, the deals also come at a cost, namely the annual membership fee. This is particularly true for those who spring for the pricier Executive membership. Executive membership provides a variety of benefits, perhaps most importantly, a cashback reward each year. With a little bit of math, it's simple to figure out just how much spending is needed to break even on the upgrade.

Costco's Executive membership provides an annual reward equal to 2% of qualified purchases at the company, up to a whopping $1,250 per year. To earn it, Executive members are charged $130 annually, double the cost of the typical $65 Gold Star membership.

Therefore, to break even compared to an ordinary Costco membership, shoppers would need to buy $3,250 of merchandise per year, which would result in a $65 reward. However, earning a reward large enough to cover the full $130 membership fee would require spending twice that much, $6,500, or roughly $542 per month. Those who want to fully max out the reward at $1,250 would need to spend a hefty $62,500 annually.

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It's worth noting that Executive members can also take advantage of a $10 monthly credit ($120 annually) to use on Costco Same Day Delivery or Costco via Instacart. That's nearly enough to cover the entirety of the membership fee on its own, but it can only be used on orders of $150 or more. 

There's one other critical caveat that might affect the decision of those who spend most of their Costco dollars on certain ineligible items that don't count toward the rewards tally. These include tobacco, gasoline, stamps, gift cards, cell phones and plans, and, in many states, alcohol. Membership fees and food court meals also sadly don't count, meaning you won't be able to chow down on the chain's famous $1.50 hot dogs all the way to the bank.

To be sure, innovative Costco members have come up with numerous ways to calculate how many rotisserie chickens and other items are needed to cover a membership. Although the feasibility of averaging $270-$540 per month of spending varies from shopper to shopper, there's no easier way to make an executive membership worth it than simply by spending enough for the 2% reward to cover it.