No Joke: You Can Get Free Money at Costco by Doing This

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When I first joined Costco, I wasn't all that cool with the idea of having to spend money to enter a store -- especially given the amount of money I'd inevitably be spending in the course of my shopping.

These days, I don't mind paying for a Costco membership because the amount I save during the year on groceries and household products alone more than makes up the cost of my membership fee. In fact, even if you only save $5 a week on groceries by purchasing them at Costco, when you subtract the cost of the $60 basic membership fee, you're still ahead by $200.

But in addition to being able to save money at Costco, there's also an almost ridiculously easy way to get Costco to give you free money year after year. And it's a tactic I highly recommend if you like free money as much as I do.

Choosing the right membership could really pay off

Costco's $60 basic Gold Star membership isn't your only option for joining. You could also pay $120 for an Executive membership. Now, you may be thinking, "Why on earth would I pay double to join Costco?" But the answer is simple.

Costco's Executive membership gives you 2% cash back on almost all purchases. A few select items, like gas, food court meals, and stamps, are excluded from that benefit. But you may find that the majority of the products you buy at Costco are eligible for cash back. And in the course of a year, that free money could really add up.

Say you spend $100 a week at Costco, or $5,200 a year. Costco will give you $104 of that back if you have an Executive membership. Remember, you're paying $60 for the upgrade from the basic membership. But still, with $104 back, you're up $44 for the year in total. That's not a bad deal.

In fact, it absolutely pays to get an Executive membership if you expect your Costco spending to exceed $3,000 in a year. That's because 2% back on $3,000 is $60, which covers your upgrade cost. From there, every dollar you get back is pure profit for you.

Your free money could really add up

The more money you spend at Costco, the more cash back you're eligible for with your Executive membership, up to $1,000 per year. Of course, you probably don't want to aim for $1,000 per year because that means you'll have spent $50,000 at the store. And, well, that's a lot of money.

But Costco sells a lot of big-ticket items, like furniture, electronics, and appliances. If you buy those at Costco, you could get paid back a portion of their cost.

You should also know that vacations booked through Costco Travel also qualify for cash back through an Executive membership. It's gotten expensive to travel these days, so if you're going to book a $4,000 vacation, you might as well do so through Costco if there's a package that works for you and you get $80 of that back.

When you buy groceries at your local supermarket, has the cashier ever handed you a $5 bill as a thank you for your business? Probably not. But Costco will actually give you free money for shopping there if you have the right type of membership. So it pays to budget for the Executive version if you go there often enough or have some larger purchases on your radar you're planning to make at Costco.

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