A Few Reasons Not To Renew Your Costco Membership This Year
Warehouse giant Costco is well-known and loved by many for its rotisserie chickens (which Costco keeps at the same price for a reason), its supersized packages of paper goods, its beer and wine, and now even its 1-ounce gold bars (a great way to start investing in gold). While it's technically possible to shop at Costco without a membership, workarounds like gift cards and accompanying a friend or family member can grow old quickly. Serious Costco shoppers will want their own membership card, yet there are a few (budgeting) reasons why you may not want to renew your membership this year.
The basic membership, called Gold Star, costs $60 per year. There's also an Executive membership for $120 per year that rewards members with a store credit equal to 2% of their annual spending at the warehouse club, including on travel. If you're vacillating between the two memberships, note that members will need to spend approximately $3,000 per year ($3,000 * 2% = $60) at Costco to break even with the additional cost of Executive membership.
Why would Costco members consider not renewing their club membership? The reasons could be many, with the most obvious being that you just don't shop there enough anymore to see the savings. However, some reformed members report having a problem with overspending at Costco, like, for instance, walking in to purchase some groceries and leaving with a new 85-inch television.
You're not shopping at Costco frequently enough
If you're not using your Costco membership much anymore, that's obviously a clear signal to cancel or not to renew it once your current year expires. Perhaps you recently moved and there's no longer a Costco nearby? Some members might attempt to justify their continuing patronage by reasoning that they'll make purchases online at Costco's website, but the value proposition there isn't as great. Some experts claim Costco hikes the price of online items, sometimes by as much as 10% to 20%, to cover the shipping cost. As well, you might need to spend a minimum amount, like $75, to qualify for free two-day shipping. Perhaps that enticement will lead to more spending than you originally planned.
Or perhaps you've recently joined a subscription service like Walmart+ or Amazon Prime (are Prime benefits worth it?) and are now having all of your essential (and non-essential) items shipped to your home instead for free. That, too, could negate the need for a Costco membership, but you'll still want to consider carefully. At $60 a year, the basic Costco membership is pretty affordable. Playing devil's advocate, even if you only visit three times annually, saving $20 each visit, the membership will pay for itself.
Ultimately, if you do decide to cancel your Costco membership, know that Costco's policy is very generous. Members can cancel at any time for a full refund. That means you don't need to wait until your membership anniversary date nears to cancel. Plus, you'll receive a full refund even if most of the year has already gone by and you have already racked up some savings.
You're spending too much on bulk and/or impulse buys
Another reason you might consider not renewing your Costco membership? Overspending. Costco's selection of products is so diverse, you may find yourself wasting money on impulse items that are of questionable necessity. Even if buying groceries is a little more expensive at the supermarket, there's little risk you'll also leave with a new above-ground swimming pool or a grand piano. If your Costco splurges are affecting your ability to save or meet investing goals, such as contributing toward your retirement, it's time to surrender the Costco membership card.
Worse still, some shoppers report going into debt over their Costco purchases. Rest assured that paying interest — especially on credit card balances with an average rate of 27.64%, according to Forbes — will surely erode any savings gleaned from shopping at the warehouse store. Additionally, some Costco shoppers even report a direct correlation between shopping at Costco and snacking more than usual, thanks to all the tantalizing snacks Costco sells in bulk.
Finally, even if you still enjoy shopping at Costco and do so often, consider the effect that "retail therapy" may be having on your finances. If you're buying unnecessary items compulsively or buying in larger bulk quantities that sometimes go to waste or are difficult to store for later use, it might be time to cut up your faithful Costco card.