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Costco is different from other stores in that you can’t just walk in on a whim to do some shopping. Rather, you have to sign up for a membership to get access to Costco stores. And while you can technically shop on Costco.com without a membership, some items on the site are limited to members only. You’ll also pay a 5% surcharge as a non-member for online orders.

There are two membership tiers you can choose from at Costco. The basic option (Gold Star) costs $65 a year, while the Executive membership costs $130. But the benefit of the Executive membership is that it gives you 2% cash back on your purchases.

You might assume that getting the Executive membership doesn’t make sense due to the higher price tag. But actually, if you play your cards right, an Executive membership could be your ticket to getting to shop at Costco for essentially free.

When you earn enough cash back to pay nothing for Costco access

Costco’s Executive membership is a great deal for people who shop at the store on a regular basis. If you spend more than $3,250 per year, the Executive membership upgrade automatically makes sense, because while it costs you another $65, you’re earning more than $65 back in that situation.

Additionally, based on the Executive membership’s 2% cash back rate, if you spend $6,500 a year at Costco, you earn $130. And that covers the cost of your entire membership. It’s that simple.

You may be thinking, “Is it actually possible to spend $6,500 a year at Costco?” But if you shop there most weeks, the answer is a resounding yes.

Say you go to Costco 36 times a year and spend $150 per visit. That’s $5,400. From there, all it takes is a single large purchase to get yourself to the $6,500 threshold, whether it’s a new TV, a laptop, or a piece of furniture.

Plus, you might do your holiday shopping at Costco and spend a little over $1,000 if you have a lot of gifts to buy. A single vacation booked through Costco Travel could also do the trick.

The point is that there are lots of ways to spend $6,500 a year at Costco. And while you shouldn’t spend unnecessarily just to cover the cost of your membership fee, you may find that it happens naturally.

A membership is worth paying for even if it isn’t free

Spending $6,500 a year at Costco may not be doable for you. If you only tend to go to the store once a month and typically spend $250 per trip, that’s $3,000 a year in spending.

In that case, the Executive membership still makes sense, because a one-off purchase could get you beyond the $3,250 mark. But it’s kind of hard to go from $3,000 to $6,500.

But if you don’t end up getting your entire Costco membership paid for in the form of cash back on an Executive membership, don’t sweat it. Chances are, you’ll still get great value from your membership so that if it costs you a little bit of money per year, it’s worth it.

In addition to savings on groceries and household essentials, some of Costco’s many perks include:

• Reasonably priced eyeglasses and eye exams
• Lifetime maintenance on tire purchases
• Affordable home installation services
• Discounted gift cards
• Low-cost, high-quality gasoline

And remember, if you use the right credit card to do your Costco shopping, you can earn rewards that way, too. Click here for a list of the best credit cards for Costco so you can benefit even more.

Top credit card to use at Costco (and everywhere else!)

We love versatile credit cards that offer huge rewards everywhere, including Costco! This card is a standout among America’s favorite credit cards because it offers perhaps the easiest $200 cash bonus you could ever earn and an unlimited 2% cash rewards on purchases, even when you shop at Costco.

Add on the competitive 0% interest period and it’s no wonder we awarded this card Best No Annual Fee Credit Card.

Click here to read our full review for free and apply before the $200 welcome bonus offer ends!

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.Maurie Backman 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.