Costco’s business model differs from that of most stores. You have to pay a fee to get access to shop there (at least in person — many of the Costco products you’ll see listed online are available to non-members). Right now, a basic membership to Costco costs $60. An upgraded Executive membership, on the other hand, costs $120. But for that extra cost, you get to earn 2% cash back on your Costco purchases.
For some people, paying that membership fee is an easy call. That’s because the savings they reap more than make up for the cost of a membership.
But if you’ve been on the fence about keeping your Costco membership, then you probably don’t want to see its cost increase. The question is: Will that happen in 2024?
It’s been years since the last Costco fee hike
The last time Costco raised membership fees was June 2017. During the company’s most recent earnings call, CFO Richard Galanti was asked whether Costco was looking to raise fees in the near term.
His answer was a very firm, “It’s a question of when, not if.” But Galanti was also pretty non-committal about a specific time frame. Rather, he simply said, “You’ll see it happen at some point.” As such, it’s hard to know if a fee hike is in the cards for 2024.
Here’s why a fee hike may — or may not — happen in the new year
It’s easy enough to make the argument for and against a Costco fee hike in 2024. One reason we could see a rise in membership costs is that it’s been a long time since Costco has done that, and frankly, it’s due for an increase.
Also, Costco may feel more confident raising fees at a time when inflation isn’t quite as rampant. Inflation has been cooling pretty steadily since peaking in mid-2022. So it’s easy to see why Costco didn’t want to raise fees this year — it didn’t want to risk alienating cash-strapped members. But given the way inflation has trended in 2023, the company may feel more comfortable raising fees in 2024.
On the other hand, living costs remain elevated because of that period of soaring inflation. You can also make the argument that Costco will want to wait until that situation moderates further.
Consumers are also grappling with sky-high borrowing costs these days on the heels of the Federal Reserve’s numerous interest rate hikes. Costco may decide to let things be until the Fed starts to cut rates and there’s more relief to be had.
Prepare for a fee hike just in case
Since there is a chance Costco will raise membership fees in 2024, your best bet as a member is to prepare for that possibility. The good news is that if fees go up, they’ll likely rise only modestly — say, by $5 for a basic membership and $10 for an Executive membership. This is based on the company’s previous cadence.
If money is tight, having to spend anything extra might come as a blow. But if you’re doing okay financially, spending an extra $5 or $10 over a year probably isn’t going to make a huge difference in your savings account balance.
That said, it’s always a good idea to evaluate your Costco membership and make sure it’s giving you the value you expect. So whether fees rise in 2024 or not, see how often you’re going to Costco and try to estimate your average per-trip savings. If you’re making back your membership fee easily, then it’s probably worth sticking with Costco even once a fee hike takes effect.
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