Yes — another post about Costco.  This is *my* first one, but roughly 115% of bloggers who write about finance at some point write about Costco.  It’s like a teenager who starts playing guitar and tries to learn Stairway to Heaven.

I’ve read many of these articles, and there are three things I’ve never seen written about Costco.  Well, two I’ve never seen and one that’s rarely mentioned.

I also included a bonus at the end, because it’s my favorite part of Costco.

1) The Executive Membership Doesn’t Cost Extra

For non-business people, Costco has a “Goldstar” and “Executive” membership.  The prices recently increased to $60 and $120 respectively.

The primary benefit of the Executive membership level is you receive 2% cash back on your purchases.  This comes in the form of a Costco check (redeemable at Costco) when your membership year ends.

So in theory to make this worthwhile, you would need to spend $3000 in a year to make back the extra $60 (60/0.02 = 3000).  There’s a big ‘BUT’ that most people don’t know about.

When you receive your cash back check, if it’s worth less than $60 (or whatever the prior difference used to be), if you apply it towards your membership renewal, they will make it worth $60, essentially negating the price difference between the two membership levels.

For example:

• You sign up for the executive membership and pay $120
• You spend $1000 over the course of a year at Costco
• You receive a check at the end of the membership year for $20 (1000*0.02)
• You give them that check when you renew your membership
• That $20 is converted to a $60 value when applied to your membership renewal
• Your Executive membership renewal will only cost you $60 — that $20 cash back check is covering the difference between the two membership levels

We’ve been Costco members for 7-8 years and we’ve done this a few times.  A couple times we have received a check worth more than the value of the membership fee difference (see #2 and #3 as the reason why).  Every other year we’ve just had them upgrade the check to cover the extra part of the Executive renewal fee on its own.

Now there is an extra $60 up front to get the Executive membership.  If you never get a check over $60 then you’ll never make this money back.  However if you sometimes spend >$3000 at Costco — which is easy if you do all your food/clothing shopping there and purchase other things through them (see below), this is worth it.

2) Discounted Disney Cruises  

You always walk by the advertisements on the way out telling you that you can save on garage doors and air conditioning etc.  One of those adverts is for vacations.  One of which is for Disney Cruises.

Disney has done a great job of price-fixing their cruises — it’s seems impossible to get a discount.  Everywhere you go has the same price.  The differences are in the bonuses/rebates or some form of “cash back” equivalent they give you to book through them.  Many of them give money towards things you can buy/do during the cruise.

We did a Disney Cruise ~5 years ago, and after researching multiple options, I discovered that Costco’s “cash back” was hands down the best value of all the options.

Unlike many of the deals I encountered, Costco gives you Costco cash/gift card, which is actually useful if you already shop there.  It doesn’t force you to spend the $ somewhere you won’t have value (ie on the cruise itself putting it towards an excursion you otherwise would not do).

Additionally, the value of the cash back was higher than any travel agent or online deal I could find.

3) The Place for Tires

Costco (and Sams) have tire-only auto repair stores attached to them.  It turns out that Costco often has FAR and away the best deal on tires, if they have the tire you are looking for.

They only carry a few brands, and they have more selections for sedans than larger cars (ie minivans, SUVs).

Up until 2 years ago we owned a Honda Accord; we purchased new tires from Costco, and when I compared to “regular” stores (Firestone, etc) the cost of a high-end all-season tire + install was ~$300 cheaper than the competition.

Purchasing from them also gets you a tire/road hazard warranty that’s better than most of the competition.

Now this is not always the best place for tires.

When I recently shopped for tires for our Kia Sorento and Honda Odyssey (we traded the Accord for the Odyssey), the selection was narrow and the tires I found were not rated very high by third-party groups.  While the price was still better than the comparable tire from local shops, I couldn’t find the tire I wanted.

So the last two times I bought tires I actually bought from Tirerack and had them shipped to a local store where I just paid the installation fee.

Bonus — The Best Pumpkin Pie

They sell a 3.5 pound pumpkin pie for ~$6.  It’s only available ~October through December.

And it’s amazing. Outside of my wife’s grandmother’s pumpkin pie, it’s the best pumpkin pie I have ever had.

Last October I ate 5 pounds of Costco pumpkin pie.

I bought one and ate it essentially by myself over the course of a week.

Later that month I bought a second.  I split it with the kids.

About a week later I had my cholesterol level checked.  I do not wish to disclose that number.  But it was worth it.