Can a Costco Membership Save You Money?

Editor's Note: This story originally appeared on Living on the Cheap.

Many people seem to have a love-it-or-hate-it attitude toward warehouse stores, but I am a proud card-carrying Costco member because it does save me money.

Here’s how I save money at Costco and avoid the (expensive) pitfall of overspending on bulk goods.

With only two in our household, we don’t do all of our shopping at Costco, but some bargains keep us going back about once a month. So is it worth the cost of a membership?

How much is a Costco membership?

The Costco Gold Star annual membership costs $60, while the Executive Membership is $120.

The Executive Membership gets you 2% back on most purchases at the end of the year. If you don’t earn enough of a rebate to cover the cost of the upgrade from the regular membership, Costco will refund the difference.

(The exact wording states: “To receive a refund for the current Executive upgrade fee, the membership must be canceled or downgraded to a Gold Star or Business Membership. Any 2% Reward issued or accrued will be subtracted from the refund and forfeited to the extent it exceeds the amount of any refund.”)

What I’ve found is that with careful shopping, either membership level can save you money.

How I save money with Costco coupons

Our Costco shopping trips are based on the monthly coupon book they mail to members.

Many items aren’t a great deal without the coupons, which tend to repeat every three to four months, so by the time I run out of an item, it’s likely to appear in an upcoming book.

The coupon savings are automatically applied, so no need to clip and take them with you.

With Costco coupons, I find great deals on peanut butter, Starbucks or Kirkland (roasted by Starbucks) coffee, canned soup, Ziploc bags, Kirkland environmentally-responsible laundry detergent, dishwasher tabs, cooking spray, DiGiorno or Costco’s take-and-bake pizza (which can be frozen), and kitchen trash bags.

What should you buy at Costco?

While the coupons add up to excellent savings, some items — especially in produce — are always priced great, with or without a coupon.

Of course, the larger sizes aren’t a bargain if they go bad before you use them, so think about your family size and eating habits before you buy the “large economy size” of perishable items.

Bananas are a great deal, but we often find that they are too ripe for two of us to consume quickly enough unless I plan to bake with them. Berries can be found for great prices at different times of the year; the same with romaine lettuce.

Some Costco warehouses have their own gas stations, and the price is almost always the cheapest in town.

Costco’s store brand is called Kirkland Signature, and the quality of those items is uniformly excellent. There’s a reason for that: Big-name manufacturers are the ones making the products for Costco, but you’re not paying for the brand-name label.

Other great deals at Costco (prices vary by region)

• Baby formula: A friend who is a new parent told us, “The best place we’ve found where Costco pays off is baby formula. Bigger sizes, less cost than name brands. Huge amount of saving per box. It really makes a huge difference. And since baby formula is highly regulated, you can use non-name brand stuff and still feel good about it.”
• Baking soda: There are tons of uses for baking soda, so I like to keep a big bag around.
• Butter: Sticks of butter freeze well, so I like having extra around.
• Costco cottage cheese
• Heinz white vinegar: I use white vinegar for cleaning, so this is a big savings and more convenient.
• High quality cheese: Prices vary greatly, but Costco offers some great deals on specialty cheeses that are perfect for parties.

More great deals at Costco

• Kitchen trash bags: There are occasionally coupons in the Costco book so you save even more.
• Nestlé chocolate chips
• Organic olive oil: Kirkland Signature Organic Extra Virgin Olive Oil is consistently rated highly in expert reviews.
• Organic canned black beans: Sometimes Costco offers a coupon on top of that price.
• Shredded cheese: When we get home, we divide the cheese into freezer bags and use 1 pound at a time. Shredded cheese can be frozen without loss of quality or even texture, and you just take it directly from the large Costco cheese bag and portion it into Ziploc freezer bags without any other prep. We make homemade pizza a lot, and the previously frozen cheese works and tastes just as good.

Costco’s food court

If this food talk has made you hungry, you might try Costco’s food court. My husband sometimes sneaks away for a hot dog and soda for $1.50.

You can definitely feed a family here for less money than at a fast-food drive-through, and it could be a bargaining chip to get kids to behave during shopping.

Clothing at Costco

Did you know that Costco sells more apparel each year than Old Navy? We’ve been happy with no-iron men’s and women’s dress shirts and sweaters for less than $20.

One Living on the Cheap editor loves Costco for athleisure wear and women’s shoes, also priced at $20 or less.

Don’t forget to check Costco.com when shopping for clothes; there’s often a greater selection of colors and sizes than at your local warehouse, though the price may be slightly higher online.

The store has no dressing rooms, but its return policy makes it easy to return or exchange items, as long as you live near a warehouse.

You can also return online orders by mail and Costco will refund the return shipping fees as well.

Buying appliances and electronics at Costco

Electronics and large appliances can be an especially good deal because Costco extends the manufacturer’s warranty up to two years from the date of purchase on the following items:

• Televisions
• Projectors
• Computers
• Major appliances

Since most manufacturers’ warranties are good for only 12 months, that’s like getting a year’s extended warranty for free.

If you plan to buy big-ticket items ($3,000 or more), it makes sense to upgrade to an Executive Membership, because the 2% rebate on just those items will pay for the upgrade. The rebate on everything else you buy then becomes free money.

Home improvement at Costco

Need new carpet, flooring or window treatments? Costco contracts with local providers to give you savings on home improvement items.

A Living on the Cheap editor got new carpet for the upstairs of her home at a significant savings through Costco. The 2% Executive Membership rebate was another plus.

Other great deals on non-food items

Photo holiday cards are a good bargain, and Costco is one of the best places to find a rental car. The store also offers some of the lowest-price prescriptions, including pet medications.

Unlike most pharmacies, Costco puts prices of prescriptions online so you can find the best deal.

What not to buy at Costco

Everything isn’t a great deal at Costco, of course. I rarely purchase health and beauty items there because I can find better deals during drugstore sales using manufacturers’ coupons.

And while Costco does have some decent deals on meat, I usually find better deals shopping the sales at a few different grocers.

Costco return policy

The store also has a very generous return policy, a 30-day price adjustment policy and a Risk Free 100% Membership Guarantee — you can cancel for a refund if you aren’t satisfied.

These make a Costco membership a very low-risk purchase and may just be the final point that helps you decide on whether to buy a membership or not.