Forget Costco Gold Star: Here's Why an Executive Membership Is Worth It

Enter a Costco warehouse, and the options are endless: "Yes, I need some yellow legal pads, but do I really need 48 of them?" "Man, that air fryer is a good deal, and we'll eat healthier too, right?" "CoQ10, what's that? I heard it's supposed to be good for you; what the heck, it's only $24.95 for 200 pills."

And that is even before you have to decide between the pizza and a hot dog at the food court. Now it's getting tough!

While conundrums like these abound, the true choice in a Costco is what sort of membership to opt for. Even if you're a member already, this is a yearly decision, and the choices are:

• The Gold Star membership
• The Executive membership

Let's unpack them both and see why the smarter move is choosing the Executive membership.

The basic Gold Star vs. Executive membership

While Costco's basic Gold Star membership gets you into the warehouse of bargains and offers great value, more than a few savvy shoppers opt for the Executive membership. Why? The main reason is that the upgrade can offer even more savings.

The Gold Star membership, priced at $60 annually (but set to rise to $65 on Sept. 1), grants you access to Costco's warehouses and online shopping. That is a great deal, especially if you're shopping for a family, organization, business, or restaurant. The price breaks on the bulk buys are not to be beat. If that's all you're looking for, then the Gold Star membership might be just the ticket for you.

That said, the Executive membership, at $120 per year ($130 as of Sept. 1), includes all Gold Star benefits plus other impressive perks that can quickly offset the higher cost. That's why so many people go with the Executive membership.

The 2% rebate secret weapon

The standout feature of the Executive membership is the 2% reward on eligible Costco purchases. This accumulating cash back applies to most items, including Costco Travel bookings.

Say that you spend $3,000 a year at Costco (roughly $250 per month). That means at the end of the year, you'll get a coupon in the mail from Costco equaling 2% of that $3,000 spent, or about $70. By choosing the Executive membership, you made a profit of $10. In any case, the $60 extra you spent for the higher membership tier is more than offset by the 2% savings.

For families or businesses running up bigger credit card tabs at Costco, this reward can be significant. Spend $6,000 a year there and you'll earn back your entire membership fee. Sweet!

And just who is your typical Costco shopper? According to Investopedia, "The average shopper in the United States is an Asian-American woman. College educated and 39 years old, this individual earns more than $125,000 per year."

Exclusive offers and additional savings

But the benefits and bonuses of an Executive membership don't stop there. Executive members often receive special offers not available to Gold Star members. These can include:

• Extra discounts on services like insurance and home installation
• Early access to new products or special events
• Increased savings on Costco Travel packages

Travel cheaper with Costco Travel

Indeed, another bonus benefit of the Executive membership is travel discounts that can really add up. The 2% discount applies to all aspects of all Costco Travel purchases (vacations, cruises, rental cars, etc.) thereby netting substantial savings. In addition, Executive members often get room upgrades and other travel perks.

So, which is best for you?

If you don't buy a whole heck of a lot at Costco, then a Gold Star membership should suffice. That's especially true if gas is one of your major purchases there, as the 2% cash back doesn't apply to gasoline.

On the other hand, for most regular Costco shoppers, the Executive membership almost always quickly pays for itself, especially when travel is added in.

And note this one last cool perk: You can always downgrade for a refund if you choose Executive membership and find it isn't paying off. So the best bet usually is to opt for the Executive tier and let those little black Costco membership cards fall where they may.