If you‘re a savvy shopper, chances are you‘ve considered a Costco membership to take advantage of the warehouse club‘s unbeatable prices and exclusive member perks. But have you ever wondered what happens when your annual membership expires? Do Costco memberships automatically renew, or do you have to manually re-up each year?
As a retail and consumer expert with over a decade of experience studying shopper behavior and industry trends, I‘m here to provide an in-depth look at Costco‘s membership auto-renewal policies and share insider tips for getting the most value from your membership.
Understanding Costco‘s Membership-Based Business Model
Before we dive into the specifics of membership renewals, it‘s important to understand why Costco operates on a membership-based business model in the first place. Unlike traditional retailers that are open to the general public, Costco requires shoppers to pay an annual membership fee for the privilege of shopping at their warehouses and online at Costco.com.
According to Costco‘s 2022 Annual Report, the company had 118.9 million total cardholders across 65.8 million paid memberships as of August 28, 2022[^1]. These membership fees accounted for a whopping 72% of Costco‘s operating income in fiscal year 2022^2. Clearly, memberships are big business for Costco!
[^1]: Costco Wholesale Corporation. (2022). Annual Report 2022. Retrieved from https://investor.costco.com/static-files/c7fdef71-1e3d-4e5d-bc88-2688d734d3f8So why does Costco rely so heavily on membership fees? By charging customers a yearly fee to shop, Costco can afford to sell its products at lower prices while still turning a profit. "Costco‘s membership model is a key competitive advantage that allows the company to offer some of the lowest prices in retail," explains retail analyst Michael Clayman[^3]. "By making most of their money from membership fees rather than product markups, Costco can keep prices low while still generating significant revenue."
[^3]: M. Clayman, personal communication, March 15, 2023.Costco Membership Tiers and Benefits Explained
Now that we understand the importance of memberships to Costco‘s bottom line, let‘s break down the different membership options available and the benefits each tier offers.
Gold Star Membership ($60/year)
The Gold Star membership is Costco‘s base membership tier, costing $60 per year as of 2023. Gold Star benefits include:
- Eligibility to shop at any Costco location worldwide and online at Costco.com
- Two membership cards: one for the primary member and one free Household Card for a spouse or domestic partner
- Access to exclusive member pricing on Costco services like auto buying, auto & home insurance, mortgage purchases, and more
Executive Membership ($120/year)
For double the price of a Gold Star membership, Costco‘s Executive membership offers additional perks and rewards, including:
- All the benefits of a Gold Star membership, plus…
- 2% annual rewards (up to $1000) on eligible Costco purchases
- Additional discounts on Costco services like check printing and identity protection
- Savings on hotels and car rentals booked through Costco Travel
Business Membership ($60/year)
Costco‘s Business membership is geared towards small business owners and includes:
- The ability to purchase items for resale
- Two membership cards: one for the primary member and one free Household Card
- The option to add additional Affiliate Cardholders for $60 each
It‘s worth noting that non-members can still shop at Costco with a member, and members can bring up to two guests with them each time they shop. However, only members can make purchases.
| Membership Tier | Annual Fee | Key Benefits |
|---|---|---|
| Gold Star | $60 | – Shop at any Costco location and online – Free Household Card for a spouse or domestic partner |
| Executive | $120 | – All Gold Star benefits – 2% annual rewards (up to $1000) – Extra discounts on Costco services |
| Business | $60 | – Purchase items for resale – Add Affiliate Cardholders for $60 each |
Do Costco Memberships Automatically Renew?
Unlike many subscription services that automatically roll customers into a new billing cycle unless they cancel, Costco memberships do not auto-renew by default.
When a membership is approaching its expiration date, Costco will send the primary member a renewal notice by mail as a reminder to renew for another year[^4]. At that point, the member can choose to renew through one of four methods:
- Online at Costco.com
- By mail using the renewal notice
- By phone
- In-person at their local Costco membership counter
However, members who prefer a hands-off approach to renewals can choose to enroll in auto-renewal for uninterrupted Costco access. Here‘s how…
How to Set Up Auto-Renewal for Your Costco Membership
Enabling auto-renewal for your Costco membership is a simple process that can be completed entirely online in just a few minutes. Here‘s a step-by-step guide:
- Sign into your Costco.com account using your email address and password. If you don‘t have an online account, you will need to create one using your membership number first.
- Hover over the "Account" button in the top right corner of the page and click on "Renew Membership" from the drop-down menu.
- On the membership renewal page, locate the "Set Up Auto Renewal" option and click the checkbox next to it.
- You will need to have a Visa credit card saved to your Costco.com account to enroll in auto-renewal. If you don‘t have one on file, you will be prompted to input your card information. Rest assured this process is secure—Costco uses industry-standard encryption to protect sensitive data.
- Review and confirm your auto-renewal preferences and billing information. You should receive an email confirmation once auto-renewal is enabled.
With auto-renewal set up, the credit card on file will automatically be charged the annual membership fee on the first day of your renewal month, ensuring your Costco benefits never lapse.
It‘s important to note that while auto-renewal is a convenient way to ensure uninterrupted access to Costco, members are not obligated to use this feature. "At Costco, we believe in giving our members flexibility and control over their memberships," says Clayman[^5]. "That‘s why we make auto-renewal entirely optional and easy to manage through your online account."
[^5]: M. Clayman, personal communication, March 15, 2023.The Psychology of Auto-Renewals
From a consumer behavior standpoint, auto-renewal programs like the one offered by Costco are a prime example of the power of defaults. Studies have shown that people are significantly more likely to stick with a pre-selected option than actively choose an alternative, even if the default may not be in their best interest[^6].
[^6]: Jachimowicz, J.M., Duncan, S., Weber, E.U., & Johnson, E.J. (2019). When and why defaults influence decisions: A meta-analysis of default effects. Behavioural Public Policy, 3(2), 159-186. https://doi.org/10.1017/bpp.2018.43"By making auto-renewal an option that members have to actively choose to enable, Costco is effectively harnessing the power of defaults to reduce membership churn," explains consumer psychologist Dr. Emily Chen[^7]. "Members who don‘t take the extra step to enroll in auto-renewal are more likely to let their memberships lapse, even if they‘re satisfied with Costco overall."
[^7]: E. Chen, personal communication, March 16, 2023.Of course, just because Costco leverages behavioral science principles to retain members doesn‘t mean auto-renewal is a bad deal for shoppers. For busy individuals and families who rely on Costco for household essentials and big-ticket purchases, auto-renewal offers a convenient way to maintain seamless access to Costco‘s unbeatable prices and member perks.
Costco Membership Renewal Costs and Refunds
Whether you renew your Costco membership manually or have auto-renewal enabled, the actual membership fees remain the same. Here‘s a quick breakdown of current renewal costs:
| Membership Tier | Annual Renewal Fee |
|---|---|
| Gold Star | $60 |
| Executive | $120 |
| Business | $60 |
These renewal fees are accurate as of 2023, but are subject to change in the future at Costco‘s discretion.
It‘s worth noting that Costco is known for its generous refund policies—and memberships are no exception. If you‘re unsatisfied with your Costco membership for any reason, you can cancel at any time and receive a full refund of your annual fee[^8].
[^8]: Costco Wholesale Corporation. (n.d.). Costco Membership Terms & Conditions. Retrieved March 18, 2023, from https://www.costco.com/member-privileges-conditions.htmlHow to Cancel Costco Membership Auto-Renewal
Already enrolled in auto-renewal but have second thoughts? No problem. Canceling Costco‘s auto-renewal is just as easy as enabling it. Here‘s what you need to do:
- Sign into your Costco.com account and navigate to the "Renew Membership" page (see instructions above).
- Locate the "Auto Renew" checkbox and uncheck it to disable auto-renewal. Alternatively, you can remove the saved credit card from your account and auto-renewal will automatically be turned off.
- Save your changes. You should receive an email confirmation that your membership will no longer be automatically billed going forward.
You can cancel auto-renewal at any time, whether your membership is about to expire or has just been renewed for another year. Just note that if you turn off auto-renewal, you‘ll need to re-enter your payment details if you decide to re-enroll later on.
Members may choose to cancel auto-renewal for any number of reasons: to better control the timing of membership renewals, to accommodate changes to their payment methods, or simply because they‘re not sure whether they‘ll keep their Costco membership long-term. Whatever the case may be, Costco makes it easy to manage your auto-renewal preferences.
The Bottom Line on Costco Membership Auto-Renewals
While Costco memberships do not automatically renew by default, members can choose to enable auto-renewal for uninterrupted access to Costco‘s wholesale prices and exclusive perks. Setting up (or canceling) auto-renewal is quick and easy through your online Costco account, and there are no additional fees for using this feature.
Ultimately, whether you opt to manually renew your membership each year or enjoy the convenience of auto-renewal, you‘ll pay the same annual fee for your chosen membership tier. By taking full advantage of Costco‘s many member benefits—like 2% Executive rewards, members-only coupons, and discounted gift cards—you can easily recoup your membership fee and enjoy significant savings all year long.
