Earning 3% back at CostCo Wholesale

Most people that know me, know that I am a huge fan of CostCo.  I love everything about them from the product selection to customer service to the way they treat their employees.  I have never really had a bad experience shopping at a location.  However, I do try to avoid the store on the weekends at all cost as the crowds can be overwhelming.

I just recently renewed my membership and upgraded to the Executive Level which gives me 2% back (pre-tax) on all purchases.  It also gives me a nice fancy black card that sets me apart from the rest.  The cost of this membership level is $100 upfront, but even if you don’t spend enough to get the 2% back they will send you a check to make up the difference to the basic $50 membership level.  So the membership never costs more than $50 a year. (Edit: They told me this at the counter, but I have not seen this stipulation in writing.)  The only downside is you are giving CostCo $50 of your dollars to invest.  However, I plan on spending more than enough to recover my $50 and then some.  Between myself and the other card holding member I would expect to spend a conservative $3000.

$3000 * .02 = $60 check

$60 – $50 Executive Costs = $10 earned over the regular membership

Even if you only make $10 on the deal, that works out to be a 20% return on the extra $50 investment.  Granted you did have to spend $2500 at CostCo before obtaining this award.  This is similar to a rewards credit card that has variable tiered reward payouts and will only offer a reward after the $2500 mark.  Keep in mind that the maximum reward payable by CostCo is $500… if you just happen to be a family or business spending more than $25,000 there a year.

Now, if you also get the American Express TrueEarnings Card you get 3% back on gasoline, 3% back at restaurants, 2% back on travel and 1% back on everything else, including CostCo.  Add this to the 2% back from the Executive membership and you are accumulating 3% back at CostCo after you spend $2500 there.  This is a pretty good rate and works out to be:

$3000 * .01 = $30 + $10 = $40 back for that year.  This comes out to be 1.3%.  Of course this rate increases the more you spend because of the need to spend $2500 to cover the extra membership cost.  If you did spend the maximum of $25000 the rate would be:

$25000-$2500 = $22500 * .02 = $450 net earned (not counting the $50 for the regular membership)

$25000 * .01 = $250

Total = $700 back for the year or 2.8% overall of your total spent.

Who ever said shopping does not pay?

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02 2009

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