Is Costco Membership Worth It? 5 Scenarios When it Definitely Is

November 12, 2022

You’ve probably heard your friends talk about how awesome Costco is and all the membership perks they love. But in the back of your head you might still be thinking, “if I shell out 60 bucks for an annual membership, will I use it enough to get my money back? Is Costco membership worth it?”…

Get ready math nerds… In this article I’m going to lay out 5 scenarios in which shopping at Costco throughout the year will save you enough money to fully cover the $60 annual membership fee (and more!). And also at the end I’ll list a few reasons why Costco might not be worth it for you.

Let’s get to it  👇👇👇

Costco Gas: Cheap fuel alone is worth it 

Let’s say you pay $60 for a Costco executive membership. And let’s say you never step foot inside of a Costco warehouse, but only use your membership to fill up your car throughout the year at Costco gas stations.

Will you save enough on gas alone each year to cover the cost of your membership?

Let’s do the math! And we’ll use the following assumptions based on consumer averages…

  • Average driver in the USA uses 562 gallons of gas each year.
  • Average Costco gas price is ~20 cents cheaper per gallon in the USA (it’s often reported to be up to 60 cents per gallon cheaper in some states like California!!)

562 Gallons x 20 cents = $112.40 in savings

$60 membership cost

(-$112) annual gas savings

= $52 net savings!

It’s also worth noting that Costco Gas stations have more “premium” fuel which is way healthier for your car. ALSO, paying with the Costco Anywhere VISA gives you an additional 4% cash back on gas purchases! (that’s like another $80-90 in savings for average US drivers)

Conclusion: Is Costco membership worth it for gas? YES!!! (Even if you are a below average US driver)

Costco Rotisserie Chicken: 17 chickens pays for your membership

My friend said the other day that their Costco membership is worth it for the Rotisserie chickens alone! This got me thinking… “How many chickens do you have to save money on to be able to pay for your full annual Costco membership?”

Here’s the math:

  • Costco Rotisserie chickens are $5, and 3lbs each fully cooked.
  • Comparable supermarket prices are between $8-$9 for the same 3Lbs (this doesn’t include other warehouse clubs like Sams Club of BJs which you have to pay membership fees for)

If we take the $60 Costco annual membership fee, divide it by $3.50 savings on average per chicken, this equals 17 chickens that would cover the cost of membership.

Conclusion: Is Costco membership worth it for chickens? YES!!! (assuming you buy at least 17 per year)

Costco Auto: New Tires could pay for membership

Consumer Reports surveyed 16,000 people and ranked the top 25 Tire Stores in the country. Costco came up as #5 overall on the list, ranking 5/5 stars for “free perks” and “installation quality.”

Depending on the exact tires you’re looking for, there’s a good chance that Costco has the best price around. BUT, in addition to already solid prices, Costco frequently has $70-$80 off sales deals throughout the year! Costco Auto also offers free installation and a 5 year road hazard warranty that most tire places don’t offer.

All in all, the savings on tires from Costco Auto will cover the $60 Costco membership fee for a year, maybe even 2! That’s without taking advantage of any other membership perks.

Conclusion: Is Costco membership worth it for car tires? YES!!! (and savings will at least cover you for 1-2 years of membership cost.

Alcohol discounts with Kirkland brand liquor:

If you’re hosting a huge party or drink liquor regularly throughout the year, you’ll love the discounts on Costco Store Brand Liquor.

Here are a few price *and quality* comparisons where Kirkland brand liquor can save you big bucks. These are all comparing 1.75L size bottles, with internet-sourced taste comparables!

  • Kirkland Vodka for $25, compared to Grey Goose for $45 (savings of $20)
  • Signature Blended Canadian Whiskey for $30, compared to Crown Royal at $50 (a $20 savings per bottle)
  • Kirkland Signature Silver Tequila is around $30, compared to Patron Silver for $75 (savings of $45)
  • Kirkland Signature Spiced Rum for $17, compared to Captain Morgan for $30 ($13 savings)
  • Signature London Dry Gin for $20, compared to Bombay Sapphire for $30 (savings of $10)

Hard liquor aside, another well known Costco perk is buying discounted wine! Members typically save $2-3 per bottle on popular wine names. If you drink a decent amount for the year, it doesn’t take long to recoup your entire annual membership cost.

Conclusion: Is costco membership worth it for alcohol savings? YES!!! (assuming you drink liquor or wine regularly throughout the year)

**Ps. Many states require warehouse clubs to sell their alcohol to non-members! Here are the other Costco secrets you might not know**

Costco Anywhere VISA is worth the membership cost alone

Costco partners with Citi Bank to offer a rewards credit card called the Costco Anywhere Visa. Depending on how much you use it, you could accumulate enough cash back to pay for a Costco annual membership.

Costco Anywhere Visa Cash back perks

Here’s a summary of the credit card benefits:

  • No annual fee
  • 4% cash back at Costco Gas (up to $7,000)
  • 3% cash back on restaurants and eligible travel purchases
  • 2% cash back on Costco and purchases
  • 1% cash back on everything else

For gas, if you paid an average of $3.50 per gallon for 562 gallons at Costco Gas stations, you’d spend a total of $1,967 each year. At 4% cash back that means $78.68 in savings!!

For restaurants, if you eat out 5-6 times a month and spend $300 on dining, that’s $3,600 each year. At 3% cash back this gives you $108 in savings!!

Travel, groceries, regular spending, etc. You can see how easy it is to justify a $60 Costco membership by using the Costco credit card.

Conclusion: Is the Costco credit card worth it? YES!! (even if you only use it in 1 spending category)

When Costco membership might not be worth it:

You can see so far that it’s not hard to justify becoming a Costco member. But, there are some circumstances when Costco might not be a great fit for you.

  1. If you don’t live near a Costco. There’s no point in driving 20 miles to the nearest Costco Gas station to fill up as the savings might now cover the travel time.
  2. When your spending is extremely low. All of our examples above are based on spending money to save money. But if you’re a small household with a tiny budget, you might not save enough to make Costco worth it.
  3. If you hate busy shops & parking lots. Costco is notorious for being PACKED on the weekends and always bustling with shoppers. If you hate places like this, perhaps your sanity is more important and you should opt for less busy shopping spots!
  4. If you eat mostly perishable goods. Costco is great for buying in bulk. But if you can’t eat things fast enough, or don’t have room to store items, it might not be worth shopping there.
  5. If you’ve found better discounts elsewhere! You might already have a killer shopping routine and save money on groceries at your regular spots. If it ain’t broke, don’t fix it!
  6. Impulse shopping is tempting at Costco. If you’re an impulse buyer, you might overspend at Costco because a big chunk of their sales look so tempting.
  7. Sharing a membership or buying without one. One of the best Costco hacks is shopping with a friend who already has a membership! Also, some products can be purchased without a Costco membership, like alcohol in most states and pharmacy services.

The Bottom Line:

Almost 120 million households pay for Costco membership. And I bet every single one of them has recaptured enough savings throughout the year to make their memberships worth it. Most warehouse clubs are worth it!

There’s also no harm in trying Costco. Because if you sign up and don’t think you’ve gotten enough value, you can cancel your membership and request a full refund. They’re that confident you’ll love it!

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**Feature pic by Marques Thomas on Unsplash!

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