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The decision to join Costco may be a no-brainer for you if you have a large household to feed and maintain. The money you shell out for a membership may be worth it when you consider the savings you get to enjoy on these essential purchases all year round.

But one decision that may be a little tougher is whether you should stick with Costco’s basic membership at $65 per year, or upgrade to the Executive membership for $130 per year. Although the Executive membership costs double, it gives you the benefit of 2% cash back on your purchases.

If you’ve been sticking with the basic membership at Costco but plan to shop there a lot for the holidays, then now’s a good time to upgrade to an Executive membership. It may put extra money in your pocket.

Why it pays to upgrade to a Costco Executive membership

Some people spend well over $1,000 on the holidays between gifts, decorations, and extra food. If you expect to shell out a decent chunk of money on holiday purchases, then upgrading to Costco’s Executive membership now could be a smart move.

It takes $3,250 in Costco spending in the course of a year to make back the $65 it costs to upgrade to an Executive membership. Once you’ve spent even $1 more than that, you’re ahead financially.

Perhaps you typically shop at Costco twice a month and spend about $100 per visit. That puts your yearly spending at $2,400. But if you plan to buy a boatload of holiday gifts from Costco, plus lights and a Christmas tree, then you might easily exceed the $3,250 mark in the course of 12 months.

Similarly, if you’re planning to take advantage of Costco’s Black Friday sales by upgrading your TV or buying a new laptop, a single large purchase like that could push your annual spending beyond $3,250. In that case, the Executive membership pays off, despite the higher cost.

There’s no risk involved thanks to Costco’s guarantee

If you don’t like the idea of paying for Costco’s Executive membership, you can still earn cash back on your purchases by using the right credit card at the store. Click here for a list of the best credit cards for Costco shoppers.

But remember, with Costco’s Executive membership, you can double up on cash back by scoring some from your membership itself and even more from your credit card. So it’s worth considering an upgrade if you think you’ll make a decent amount of holiday purchases at Costco.

Another important thing to know is that with Costco’s Executive membership, you’re basically guaranteed to make back your $65 upgrade fee. If you don’t make it back, Costco will let you downgrade to a basic membership and refund you what your Executive membership cost.

In other words, with an Executive membership, there’s truly no financial risk involved. And you may be surprised at how many holiday items you can scoop up at Costco, thereby making the Executive membership upgrade more than worth it.

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.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money 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.