Costco Is Raising Fees in September: Here’s Why You Shouldn’t Worry

Since mid-2017, Costco members have been paying $60 per year for a basic membership and $120 per year for an executive membership. For a time, it seemed like those prices would stay forever.

However, earlier in July, Costco announced that membership fees would increase starting September 1. The cost of a basic membership will increase to $65 per year, and an Executive membership to $130 per year.

At first, the idea of ​​paying more money to access Costco might make you nervous. And that makes sense.

Nowadays it seems that everyone business is raising costs. You probably pay more for a takeout meal from your local diner than you did a year ago. And chances are your cable/streaming bill has gone up, as has your rent.

Costco’s addition may not be ideal, to put it mildly. But there are actually a few reasons why Costco’s upcoming fee hike shouldn’t worry you too much.

1. It’s a pretty small increase compared to Costco

When you’re trying to save money and avoid adding to your bills, any price increase at Costco may seem unwelcome. But when you think about how much these fee increases amount to on a monthly basis, they’re negligible.

If you have a basic membership, you will have to spend $0.42 more per month. For an executive membership, the cost will increase by $0.83 per month.

Here’s another way to look at it: If you have a basic membership, your higher fee will be the equivalent of one rotisserie chicken per year—two if you have an executive membership. Bottom line, it’s just not a huge jump, and Costco did it on purpose.

2. A higher fee may result in additional savings and benefits

Membership fees are a huge source of income for Costco. Because Costco makes so much money from them, it can use that revenue to help offset the cost of stocking its shelves. The result? A wide selection at affordable prices.

In other words, you might spend $5 or $10 more on a Costco membership starting September 1, but you could save $20, $30, $50, or $100 more by shopping at Costco all year long.

Beyond that, we don’t know what Costco plans to do once these membership fee hikes go into effect. Maybe Costco will introduce new services, like expanded catering options. Maybe it will expand its line of affordable clothing, so you can save more on clothing. Or maybe it will expand its car services, so not only can you buy tires at Costco, but maybe one day get your car’s oil changed for less.

To be clear, these are just examples — not things Costco has promised. But the point is that Costco benefits greatly by increasing its membership fees, and it will likely pass on many of those benefits to its members.

No one wants to spend more money than they have to these days. Understandably, Costco’s fee hike isn’t good news. But keep in mind that fitting the new fee into your budget shouldn’t be too hard, considering how small the increase is. And what you spend on your membership fee can easily be recouped in savings over the course of the year.

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We are staunch believers in the Golden Rule, so editorial opinions are our own and have not been reviewed, approved, or endorsed by the advertisers included. The Ascent does not cover all stocks on the market. Editorial content from The Ascent is separate from that of The Motley Fool and is produced by a different analyst team. Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has a position in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.