Free Costco membership? How buying your gas from the warehouse store can cover your $60 fee

From its famous $1.50 hot dog and soda combo to its iconic rotisserie chicken, there are a few staple items that Costco is known for. But you can get one of the chain's best deals without ever setting foot in the store.

That's because Costco loyalists know there's no better place to buy gasoline than at the wholesale giant's pumps, which regularly undercut the competition.

"You save approximately 20 cents a gallon at Costco over other local vendors," says David Schwartz, who together with his wife Susan authored "The Joy of Costco." "That's something we have seen time and time again across the country." 

Indeed, Costco's gas is so popular that the fuel sold by its 692 gas stations in 2023 represented 13% of the chain's net sales that year, according to its most recent annual report. Selling attractively-priced gas also helps lure customers into its doors.

Costco said in its report that it believes its gasoline business "enhances traffic in our warehouses."

"The only reason Exxon sells gasoline is because that's their central business," David tells CNBC Make It. "Costco has a wide range of businesses, and this is seen as a boost to those businesses." 

Even if you're not a Costco shopper, the savings on gasoline alone can make the price of a $60 membership worthwhile. Using a little back of the envelope math, David and Susan conservatively estimate that a member would only need to drive 7,500 miles per year while exclusively buying Costco gas before their membership pays for itself.

To reach that total, they divided the cost of the membership by the 20 cents per gallon they estimate a driver will save by filling their tank at Costco. The resulting figure, in the case of the $60 Gold Star membership, is 300, or the number of gallons of gas you'd need to purchase to achieve $60 in savings.

They then multiplied the 300 gallons by 25, roughly the fuel economy of the average car, to determine how many miles a person would need to drive annually to get through that much gas.

"My old Toyota used to get 35 or 40 miles, so 25 miles per gallon is probably really conservative," Susan says. 

That means if your car gets 25 miles to the gallon, you could drive 7,500 miles per year and get your money's worth from the Costco membership without ever setting foot in the store. 

That figure averages out to roughly 29 miles of driving per day if you only drive on weekdays, or about 20 miles per day if you're on the road seven days a week. 

If you have the $120 Executive Membership, those figures are doubled, meaning the membership would pay for itself if you put 15,000 miles on your tires each year. Executive Membership cardholders get an added benefit of 2% cash back on all their Costco purchases.

"You don't even have to go into the warehouse and you're already saving money," Susan says. "If you only drive 7,500 miles a year, you've paid off your regular Costco membership."

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