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Costco is a warehouse club. It boasts that it does not have minimum mark up on their product. It seems like a good warehouse club to save money. However, I was cold to the idea – there are three members in my household. Costco’s packages are too big for us, for example, pork packages are more than ten pounds. It would last more than a month for us. Meat can be frozen for later use, but milk, fruit and vegetable should be used fresh. Their smallest milk package is one gallon. It will last at least two weeks in my house. Bread packages have two loafs, corn cooking oil is one gallon or two gallons. So I haven’t joined the club. But I noticed a lot of people around me were Costco members. There is a Costco store less than five miles from my house, so I decided to give it a try and see if it made money sense for me.

There are two levels of Costco membership: gold membership with fee of $60/year, executive membership with fee of $120/year, which has 2% reward on normal purchase. I selected the executive membership, hoping that cost saving and reward can cover the membership fee. After three months as a member, here is a reality check.

My regular base yearly spending will be around $3,414. My 2% reward will be $68.28 ($3.414 x 0.02 = 68.28). Cost saving will be $167.90 (6+67.50+40.50+45.50+6.96+1.44=167.90). Total saving will be $236.18 (68.28 + 167.90 = 236.18). Costco’s saving is less than I think, but it is still a saving I can use. I heard Costco offers great services on car purchasing, electronic warranty, travel planning and others. I will check them out if the opportunity arises. Opportunities for Costco: 1. If Costco offers smaller food packages, such as 1/3 or 1/2 of current package size, to be comparable with retail store package size, more small families would join Costco. 2. I was annoyed by the double gas filling station sometime – the front car filled up and left but the second car was still filling and blocked the way. I wish Costco use single car filling stations to remove this potential choke point. More filling stations also helps – normally the waiting is four cars deep over the weekend. Conclusion Costco does save money even for a small family like mine. More than likely, I will renew my Costco membership next year.

Update at 2020-06

After two years, I am still a member of Costco Club. In addition to saving I outlined above, I also found more Costco benefit:

• Costco car rental: If you rent a car from Costco’s website, your spouse is automatically included in the contract and you do not need to pay for additional driver. Also, comparing a one week one-way rental from Los Angeles to San Francisco, same rental company and same type of car, Costco saved me $50.
• Costco car purchase program: Costco member can use Costco car purchase program to purchase new car or used car. Designated car dealer can give you a fix price less than the public price. It may not be the very best price in the city, but it may be good enough. If you like it, you can take it. Or you can continue shopping.
• Costco money back saving: With the executive membership, I had 2% cash back on every Costco register purchase (inside the store); with a Citi Visa card, I received 4% cash back on gasoline purchase everywhere. I also received 1% cash back with other Citi Visa card purchase. I was surprised that I received more than $250 cash back for last year.