3 Serious Downsides to Costco Worth Considering Before You Join
Costco has some big downsides, including costlier memberships than its competitors. Here's what you need to know before joining.
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Costco has a huge following because the warehouse club provides high-quality items at discounted prices that let members keep more money in their bank accounts.
However, it's not the right warehouse club for everyone. Before you sign up for a Costco membership, consider these three serious downsides.
1. It's more expensive than Sam's Club or BJ's
The first big downside to Costco membership is the high cost of joining. The entry level Gold Star membership will cost you $60 a year, while the upgraded Executive Membership is $120.
By contrast, Sam's Club charges $50 annually for its base Club membership and $110 for a Plus membership. And BJ's is $55 annually for a Club Card membership and $110 for its upgraded Club+ Card membership.
Now, paying $5 or $10 extra to join a warehouse club may not seem like that big of a deal, but it can add up if you remain a member for years. Plus, if Sam's Club or BJ's offer similar pricing on the products you tend to buy most, and are located near to you too, there's no real reason for you to pay the additional membership costs just to get your hands on a Costco membership card.
2. Online prices are higher than in-club prices
There's another big downside to Costco that could be especially painful to some people who prefer to shop online from the comfort of home rather than going into the club. Costco.com charges higher prices than the deals you can get in the warehouse.
The exact difference varies depending on what you buy, but if you shop online regularly, paying even a $1 or $2 more for each item can eat up any savings that Costco membership would provide. Costco's online prices are higher to account for shipping and handling costs.
Sam's Club and BJ's, by contrast, don't charge higher prices for online purchases.
3. Perks of the upgraded membership aren't that great
If you're hoping for an upgraded membership, Costco may also disappoint.
It's true that the Costco Executive membership provides you with 2% cash back on purchases, but you won't get this reward until close to your annual renewal, while Sam's Club's Plus membership awards the 2% cash back monthly. And BJ's 2% cash back rewards can be redeemed once you have a $10 balance.
Beyond the cash back, though, Costco's added perks aren't really impressive and include things you may not care about like extra discounts on auto insurance and water delivery. Sam's Club, on the other hand, has better benefits like early shopping hours, early tire and battery service, and extra discounts on prescription drugs and eyeglasses. BJ's offers its Club+ members an extra $0.05 off per gallon of gas.
Before you sign up for Costco, you need to consider all of these disadvantages. Now, you may decide that you still love what Costco offers and are still more than willing to put those membership fees on your credit card to join.
But, you don't want to go in blind and end up disappointed that you made the wrong choice when other warehouse clubs offer some definite advantages over what Costco has on offer.
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We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Christy Bieber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.
