Uncommon Cents

As mentioned in a previous post, no amount of discounting actually saves you money; it just lets you spend less money than might be expected on things you may or may not want or need. While I am loathe to buy a membership to have the pleasure of shopping there, I have spent quite a bit of time at Costco and have been a member for a few years. The question as far as this blog goes is–does being a Costco member–or a member of another warehouse outlet store, like Sam’s Club–actually help you spend less?

The outlay for a Costco membership is not substantial but also not trivial; $50 for a year for basic (Goldstar) membership or $100 for the Executive membership which gives 2% back on purchases as well as some additional benefits (none of which are important to me). So for it to be worthwhile, I would have to spend $50 less a year at Costco on things I would otherwise be buying elsewhere.

An obvious money saver at Costco would be gasoline. A dollar a week would be sufficient to “break even” given this example. Given my gas consumption (approximately 12 gallons per week), if the gas at Costco were nine cents cheaper per gallon than their closest competition–which it typically is–I would spend over $50 less per year right there. Unfortunately, for whatever reason, my truck doesn’t do well with the gas from Costco–my milage tends to be about 10% lower than with another brand of gas–so that’s out for me.

The items I purchase at Costco that typically cost less than elsewhere includes primarily non-perishable in bulk items–laundry soap, hand soap, Diet Pepsi, CD-Rs, and mini DV tapes top the list. One of the items I have purchased a couple of times during my Costco membership that has definitely paid for the membership several times over is a new set of tires for the truck. I also purchase quite a bit of food at Costco, but this is an area where caution is needed–the real area where Costco can cost you is in terms of waste. If you end up tossing out half of an extra large box of oatmeal or a quarter of a large bag of bite sized carrots, you may not have “saved” yourself a dime. In those cases it might be best to share with your family or neighbors rather than succumb to the monetary black hole of waste.

Costco is not automatically the best deal anywhere. For instance, I can get Diet Pepsi at basically the same price (sometimes less, with a sale) at a local grocer. Sometimes, yes, the deals are better–if I was shopping for iTunes gift cards, I can get four $15 cards for about $55–but careful shopping is, as usual, needed to find the best price. I can often find a CD-R or DVD-R 100 pack for a better price in the Sunday paper, although I’ve never found a deal on mini DV tapes as cheap as there.

One of the things that Costco does that I don’t like is that they only accept American Express cards or debit cards; they don’t take Visa or MasterCard or Discover (although interestingly, they do accept other credit cards online). I therefore have an American Express Costco Rewards card, which I only use for Costco or for eating out (where it gives me a 3% reward).

The answer to the question on whether or not Costco can help you spend less is depends on what you purchase there and what use you make of it. Best bets, besides gasoline, are non perishable (or items that take a long time to go bad) bulk items like soap. Food can be a bargain as well, but the potential for waste makes this better for larger families of people who can split the expense with many others. Comparison shopping and looking for sales certainly can beat Costco on most if not all items, and Costco’s brick and mortar stores limit your options as far as payment goes. Overall, I’d say Costco can help you spend considerably less–it does for me–but it’s certainly not for everyone.

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