Costco has a way of making smart people feel dumb. You walk in for paper towels, you walk out with a kayak, a rotisserie chicken, and a 48-pack of trail mix you will absolutely not finish. And before any of that, you had to hand over money just to get through the door. So the real question is not whether Costco is fun. It is whether that yearly fee actually pays you back or just quietly bleeds you.
Here is the thing nobody tells you at the entrance. As of late 2025, about 68.3 million people held individual memberships, and roughly 92% of them renew every year. That is a wild loyalty number. But loyalty and value are not the same thing, so let me walk you through when this card is a no-brainer and when you are basically donating $65 to a very rich company.
Why Costco Even Charges You To Shop
Once you understand Costco’s business, the whole store makes more sense. Those low prices are not magic. The membership fee is where the actual money lives. Through the first 24 weeks of fiscal 2026, Costco pulled in $134.2 billion in sales but only around $2.4 billion in operating income after all its costs. Meanwhile, $2.68 billion came straight from membership fees, and that money is almost pure profit.
Translation: Costco makes something like 65% to 70% of its profit just from selling you the card. That is why it can sell food at razor-thin markups. You are not the customer buying cheap groceries. You are the product that pays $65 a year for the privilege. Knowing that flips the math in your favor, because it means Costco really wants you to feel like you got your money back. Your job is to make sure you actually do.
When A Membership Is A Waste Of Money
Let me be the friend who tells you the truth. If you live alone, this card probably will not save you a dime. One person cannot burn through a two-pound bag of spinach or a case of muffins before it goes bad. Steven Millstein, a credit editor quoted by Reader’s Digest, put it plainly: if you are single and live alone, a Costco membership is not likely to save you money.
Distance kills it too. If you cannot get to a warehouse at least once a month, you will never spend enough to earn the fee back. Same story if you have no room to store bulk stuff. A 30-roll pack of toilet paper is a great deal until it is living in your bathtub. And if you are the type who sees a pallet of anything and thinks “I need that,” the store is basically designed to separate you from your paycheck. Overbuying wipes out every saving you thought you were getting.
The Gas Pump Might Pay For The Whole Thing
Here is the part that quietly wins people over. Costco gas usually runs 20 to 40 cents a gallon cheaper than nearby stations. That is not pocket change over a year.
Run the numbers. The average American drives about 13,500 miles a year and gets around 25 miles per gallon, which works out to roughly 540 gallons. Save just 25 cents a gallon and that is $135 a year. The basic Gold Star card costs $65. So the gas alone can more than double the fee before you buy a single grocery item. If you drive a lot or own a truck, the savings climb even higher. For a ton of members, the pump is the reason the card makes sense at all.
Gold Star Or Executive? Don’t Guess
Costco offers two levels, and the upsell is aggressive. Gold Star is $65. Executive is $130 and gives you 2% back on most purchases, capped at $1,250 a year. The pitch sounds great, but there is a hard number you need to know.
The break-even point for Executive is $3,250 a year in qualifying spending. At 2% back, that is where your rewards cover the extra $65. Spend less than that and you upgraded for nothing. And watch out, because gas, the food court, gift cards, and alcohol in 24 states do not count toward the 2% reward. Here is the safety net though: if your rebate comes up short of the upgrade cost, Costco will refund the difference when you downgrade. One writer literally did this, asked, and got the money back. So if your spending is borderline, start at Gold Star and move up later. The upgrade is prorated.
The Stuff That Isn’t Even Groceries
People obsess over food deals and completely miss where Costco actually saves them the most. The pharmacy offers low prices on prescriptions, including meds for your dog and cat. The optical department does eye exams for around $79 to $110 and sells glasses starting near $133, and they will adjust frames for free even if you bought them somewhere else.
The hearing aid center is a sleeper hit. Prices start around $1,500 a pair when other places charge up to $3,000 per ear, and follow-up visits and cleanings are included. Then there is Costco Travel, which bundles hotels, cruises, rental cars, and flights with extras like resort credits. One sample deal was a six-night stay in Kauai with a free night and a $150 resort credit thrown in. Tires come with free installation and rotation. None of this shows up in a grocery comparison, but it is where big spenders quietly get their fee back several times over.
You Can Basically Try It For Free
Here is a fact that removes most of the risk. A Costco membership is 100% refundable at any time, no questions asked. Sign up, shop for a month, and if you hate it, walk up to the desk and get every penny back. That is not a common return policy in retail.
Their product return policy is nearly as generous. You can bring most merchandise back at any time for a refund, with a few exceptions like electronics, alcohol, cigarettes, and diamonds. New members also sometimes get a digital shop card worth $20 to $40 bundled with signup, which knocks the real first-year cost down to as low as $45. So the downside is tiny. If you are on the fence, the fence is cheap to sit on.
What Changed In 2026 (And Who’s Annoyed)
Costco raised prices in September 2024, the first hike in seven years, and it has been adding perks ever since to make the higher fee feel worth it. The biggest new one: Executive members now get in the door at 9 a.m., a full hour before Gold Star members at 10 a.m. If you hate crowds, that quiet early hour is genuinely nice.
Executive members also get a $10 monthly Instacart credit on orders over $150, plus faster checkout systems and more self-checkout lanes. Not everyone is thrilled. Some Gold Star members have complained about being treated like second-class citizens, and employees have grumbled about the early hours cutting into their prep time. It makes sense that Costco protects its Executive crowd, since those members make up 74.2% of the company’s sales. The best customers get the best treatment, which is exactly why the store wants you climbing to that tier.
So Should You Actually Buy One?
Here is my honest read. If you have a family, live near a warehouse, drive a decent amount, and have room to store bulk items, a Costco card is close to a lock. The gas and pharmacy alone can cover the fee, and everything after that is gravy.
A simple rule from the spending math: if you will drop under $200 a month there, get Gold Star. If you are over $270 a month, Executive earns its keep. And if you live alone, far from a store, with no place to stash bulk buys, skip it or split a card with a friend or neighbor. Every member gets a free household card, so team up and cut the cost in half. The membership is not a scam and it is not a miracle. It is a tool. Use it right and it pays you. Buy it and shop like a tourist, and you will be the one funding those thin grocery margins.
