Sometimes cheap prices don't always lead to saving money.
Spending $60 for a basic Gold Star Costco (NASDAQ: COST) membership or shelling out $120 for an Executive card, could be a big benefit to consumers. The warehouse club generally offers very cheap prices, but it's also easy to fall into traps when you shop at the chain.
Continue Reading Below
You can enter a Costco with the best of intentions and emerge having made all sorts of mistakes. Here's a look at some common ones and how you can make sure that joining the warehouse club actually saves you money.
Don't fall for price alone
How many times have you walked into a Costco and seen an item at an incredible price? Sometimes that's enough to make you buy it without stopping for a second to think if you need it.
The warehouse club may have kayaks for $99, but buying one makes no sense if you don't have ready access to a body of water. The same is true in food and household categories. That may be a great deal on espresso beans, but consider if you're actually going to brew the coffee before buying.
Buying something cheap only saves you money if it's an item you need or will at least use. Getting a good deal on something that just sits on your shelf until you throw it away, actually costs you money.
Check the price
Not every item sold at Costco costs less than at rival retailers. That's not important if you're paying a few cents more for a gallon of milk. Where it can be a big problem is electronics, furniture, and other big ticket items.
In the case of electronics, warehouse clubs often don't have the best prices. To further confuse that, different chains often use different model numbers on items like TVs, and computers. That makes direct comparisons a challenge, but when anyone with a smartphone can do a quick study of other stores, it's important to do so.
Don't buy too much
One of the ways Costco keeps prices low is by offering items in bulk -- the challenge with that is for the consumer. While you're paying less per item, that only matters if you use everything you buy.
Buying a four-pack of your favorite cereal at a cheap price is awesome if you eat it all. It's much less good if you end up throwing some of it away as it goes stale.
Eating too much
Sometimes Costco sells very large bags of candy at a very low price. Since I often like the types of candy they have deals on, it's tempting to buy it. The problem is, that while the price is good, if I have a large bag of candy in my house, my consumption will increase.
In that case I'm not really saving money because I will just have to buy more candy down the line. And, of course, there are inherent health concerns in overeating just because the price was right.
Not using all your benefits
Some Costco customers just use the chain for the items on its shelves and ignore the many other deals available to members. The most obvious one might be the company's gas pumps. The warehouse club generally offers the best price on gas in any market and it's actually possible to pay back the cost of your membership just in gas savings.
Gas is not the only area where members might save money. Many Costco stores have well-priced liquor stores, tire/auto centers, and great prices on eyeglasses. In addition, the chain's website offers members deals on anything from new cars to travel, and much more.
Renewing for the wrong reason
Call it the gym trap. Some people join Costco, never really use the membership, but renew it because of all the money they could save. Good intentions don't help you get in shape and they don't help you save money.
Before joining or renewing your membership, have an honest talk with yourself. Will you actually go to Costco or use its website often enough for the joining fee to be worth it? If the answer is no, or experience shows that it's no, you actually save money by not joining.
10 stocks we like better than Costco WholesaleWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Costco Wholesale wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of August 1, 2017