Costco is well-known for the memberships that enable people to shop at the store. There are two main membership tiers for individuals (Gold Star and Executive) and a separate tier for businesses. The Executive tier is apparently held by the majority of all Costco members, but it also costs $130 per year — twice as much as the Gold Star. Customers have also been complaining that the Executive membership is notoriously difficult to downgrade. Even though it’s possible to upgrade the membership or change your Costco auto-renewal settings online, it’s not possible to downgrade or even cancel the membership with a few clicks. Instead, you have to either call or visit Costco directly.
It appears that Costco’s policy is the way it is because the store really wants to have a conversation with you before downgrading. A conversation that is, according to reports on Reddit, pretty lengthy and uncomfortable. Costco’s customer service agents require multiple verbal confirmations that you do indeed want to downgrade or cancel your membership, and they often push back on your decision. This confrontational approach could delay people from reaching out or dissuade them from going through with their choice — causing them to continue overpaying for a membership they don’t really want anymore.
Why Executive membership isn’t right for everyone
Because the Executive membership has a higher price point, it has to make sense to customers beyond just allowing them to shop at Costco. Therefore, the biggest allure of the Executive tier lies in the 2% cashback that is promised for every purchase (with occasional limitations). This percentage is added up at the end of your membership year and sent in the form of a reward certificate a few months before your Executive membership is set to renew. The reward only goes up to a ceiling of $1,250 and can be used at Costco’s physical locations.
In concrete numbers, a Costco member needs to spend at least $3,252 at the store within a year (that’s $271 per month) to get back the extra $65 they paid to upgrade from Gold Star to Executive. If they don’t spend that much at Costco, the Executive tier probably isn’t worth it. Those who are buying a Costco membership for the first time very likely don’t know how much they’ll be spending at the store throughout the year, so they can easily fall for the promises of Executive benefits and ultimately realize that the Gold Star tier is simply more aligned with their spending habits.
