As a long-time Costco member, you learn pretty quickly that it’s actually cheaper to be a member than not be one, despite having to pay to shop at the warehouse club.

  • Costco’s basic annual Gold Star membership is $65, and many shoppers recoup that cost quickly through savings on everyday purchases, according to Business Insider.
  • Just the money saved on gas purchases alone can make membership worth it, I wrote at The Motley Fool back in 2019.
  • Upgrading to an Executive membership ($130) offers a 2% annual reward on qualifying purchases, and households spending at least $3,250 a year could essentially earn back the upgrade cost via those rewards alone, according to Money Talks News.

Costco works to keep membership prices down, since that’s the core of its offering and its key promise to members.

CEO Ron Vachris reiterated that promise during the chain’s first-quarter earnings call.

“We will never succumb to not being the best price and driving prices down for our members. That’s what Costco is known for. That will always be our leading mantra.”

Costco, however, has decided to do more for members than simply hold the line on prices. It recently made three changes designed to increase the value of a membership.

Costco makes 3 membership improvements

Costco CFO Gary Millerchip shared three recent membership improvements the warehouse club has recently made.

“We’re committed to continuing to improve the value of the membership. We’ve made, obviously, some major changes recently with the extended opening hours and the Instacart benefits and 5% gas on the credit card,” he said during the Q1 earnings call.

Costco’s membership improvements at a glance:

  • Gas benefit: All holders of the Costco Anywhere Visa from Citi get 5% cash back on gas purchases made at Costco stations and 4% back at other gas stations, up to $7,000 in spending combined annually, according to Citi.
  • Expanded hours for Executive members: Costco has implemented nationwide expanded early-morning shopping hours exclusively for Executive Members to reduce peak-time crowds. Executive members can now enter warehouses at 9 a.m. (Monday–Sunday) for an extra hour of private shopping before standard, 10 a.m. opening for other members. 
  • Instacart benefit: Costco now offers members a discounted annual Instacart+ membership ($79/year) and potential free trials, plus a special $10 monthly credit for Executive Members on $150+ orders, redeemable on Instacart or Sameday.Costco.com, along with potential item price savings up to 7% by linking accounts.

“We’ll continue to look for ways to add greater membership value,” Millerchip shared.

Reward caps, and any Costco benefit, it should be noted, can change at any time under the terms of the warehouse club’s membership and its credit card agreement.

Costco’s Visa credit card offers cash back on gas.

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Analysts support Costco’s moves

Scott Benedict, Vice President of Partnerships at WhyteSpyder, an Ascential Digital Commerce company, believes the expanded hours will benefit the chain.

“Without a doubt, Costco has excelled at developing its Executive Membership penetration. It has also shown value in its membership programs for decades, which has underpinned its success. Sam’s Club has offered early access to its Clubs to Plus Members for years, after initially only offering it to Business Members,” he wrote on RetailWire

Carol Spiekerman, his RetailWire Brain Trust colleague, sees a small risk.

“Keeping the executive shopping hour windows relatively short is a smart strategy. Plenty of Costco members travel from afar to make dedicated stock-up trips. To unknowingly arrive at 9 a.m. and be refused entry would be annoying or infuriating, depending on the shopper. Maybe taking Costco’s infamous hot dog and beverage deal out to the parking lot will help take the edge off,” she posted.

More Retail:

  • Costco sees major shift in member behavior
  • Retail chain shuts all locations as legal changes hit industry
  • Lululemon struggles to reverse concerning customer behavior
  • T-Mobile launches free offer for customers after major loss

Costco’s Citi Visa gas cashback offer factors into The Points Guy suggesting that the credit card is a good one for families, but it did point out one caveat.

“It’s worth pointing out that you’ll earn just 1% back (not 5% or 4%, respectively) on gas and EV charging purchases from superstores, supermarkets, convenience stores and warehouse clubs other than Costco or on fuel purchases that aren’t for automobiles (such as jet or boat fuel),” the site wrote in its review of the Costco Anywhere Visa by Citi.

NerdWallet reviewed the card well for its gas offerings, too.

“Those are impressive rates, even when compared with the best gas credit cards on the market. Even if you only get your gas from non-Costco-branded stations, if you max out the annual cap you’ll earn $280 per year on gas alone, not including the 1% back on any purchases in the category beyond that,” the site shared in its review.

If I lived closer to a Costco, the gas prices plus the cashback from the credit card would make the membership and the card an obvious decision based on pure math.

Related: Costco Anywhere Visa vs. Sam’s Club Mastercard: How the warehouse club credit cards compare

Costco grows its membership revenue

Costco makes changes to its membership offer because it wants to hold onto existing members while adding new ones. It has been successful in doing that.

“Moving down the income statement to membership fee income. We reported membership fee income of $1.329 billion, an increase of $163 million or 14% year-over-year,” said Millerchip during the Q1 earnings call.

He also shared some other membership numbers:

  • Last September’s U.S. and Canada membership fee increase accounted for a little less than half of membership income growth.
  • Excluding the membership fee increase and FX, membership income grew 7.3% year-over-year.
  • This was driven by continued growth in our membership base and increased upgrades from Gold Star to Executive Membership.
  • At Q1 end, we had 39.7 million paid Executive Memberships, up 9.1% versus last year.
  • We ended the quarter with 81.4 million total paid members, up 5.2% versus last year, and 145.9 million cardholders, up 5.1% year-over-year.

Costco membership highlights:

  • Gold Star Membership: $65/year; savings on everyday purchases often exceed the cost
  • Executive Membership: $130/year; 2% rewards on qualifying purchases
  • Expanded Executive Member Hours: Early morning access at 9 a.m. daily
  • Instacart Benefit: Discounted membership + $10/month credit for Executive Members
    Source: Costco’s membership page

Costco Visa Credit Card highlights

  • Gas Benefit: 5% cash back at Costco gas stations, 4% elsewhere (up to $7,000/year).
  • Other Rewards: 2% cash back on restaurant & travel, 1% elsewhere
    Source: Citi

Related: Costco offers a cost-saving benefit many members don’t know about