Money Management

It pays to make the most of your Costco membership. Read on to see how. 

A basic membership at Costco costs $60 a year, while an Executive membership costs $120. The more expensive membership scores you 2% cash back on Costco purchases, so if you shop there often enough, the upgrade fee could be worth paying.

But no matter which type of membership you have at Costco, you no doubt want to make the most of it. Here are some steps you can take to eke out more savings during your Costco shopping.

1. Shop at the right time

The less jam-packed it is at Costco, the easier it might be for you to do your shopping calmly and methodically. So it pays to visit the store when it’s at its least crowded.

You may be aware that avoiding Costco on weekends is a smart bet. But on top of that, a good time to go to Costco is on a weekday during the store’s late afternoon and evening hours.

At that time, parents are busy shuttling their kids to after-school activities and people are generally busy eating dinner. So if you aim to do your Costco shopping between 4:00 p.m. and 8:00 p.m., you might get much of the store to yourself.

2. Read the coupon book

Costco offers discounts on different items on a rotating basis. And if you’re a member, you should get a coupon book in the mail each month highlighting those sales.

Rather than toss that coupon book, read through it and take note of the items you usually buy. If it’s something non-perishable like tissues, you might as well stock up while they’re $5 off.

And remember, you don’t actually need to bring your coupon book with you to Costco. You’ll get whatever discount is available automatically when you check out.

3. Return things that don’t work out well for you

Costco has an extremely generous return policy. So if you take a chance on an item you don’t normally buy and it doesn’t meet your expectations, take it back.

It’s true that if you abuse Costco’s return policy, you might eventually risk getting your membership revoked. But if you’re talking about returning one or two items a month out of 30 or 40, that’s not unreasonable. And also, if you’re reasonable in the course of making your returns, there shouldn’t be an issue.

Let’s say you decide to give Costco’s new chile cornbread a try, only it ends up having too much spice for your taste. If you bring it back with a small chunk missing, you shouldn’t have a problem. But if you attempt to make that return once your cornbread is more than half-eaten, you may not get your money back.

4. Pay attention to expiration dates

Getting a bulk discount on grocery items is why many Costco members are able to save money. But if you end up throwing away a portion of your haul due to it going bad, you won’t save money — you’ll waste it.

That’s why it’s so important to pay attention to expiration dates. And one mistake Costco shoppers tend to make is being mindful of expiration dates for perishable items only.

It’s true that meat and cheese are going to have a shorter shelf life than items like potato chips and crackers. But while Costco makes a mean potato chip, if you bust open your bag six months after its best-by date, your snack might taste kind of stale. So check the expiration date on all bulk food products you buy.

A Costco membership has the potential to offer you a lot of value. Stick to these tips to help ensure that you’re enjoying as much savings as possible.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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This Costco pro knows the ins and out of shopping there. Read on for ways to make the most of your membership. 

I still remember the first time I set foot in Costco. I had just moved in with my husband in suburbia after having lived in a city all my life. I was shocked at not just the size of the warehouse club store, but also, the extent of the inventory. And I was even more shocked that you could buy so many items in bulk at such unbelievably low prices.

At this point, I consider myself a Costco shopping pro. Seeing as how I’ve been regularly shopping there for a good 17 years, I figure I’ve earned that distinction (though I’m still waiting for Costco to send me an official certificate in the mail). And here are some of the most helpful lessons I’ve learned along the way.

1. Never go on a Saturday or Sunday

A Costco run goes from being a fun experience to a hellish one when I set foot in the store on a Saturday or Sunday. That’s why I try to take advantage of the fact that I work from home and have a flexible schedule by doing my Costco shopping during the week.

Doing so doesn’t just mean smaller crowds. It also, often, means making savvier decisions because I’m not in a frenzy due to being overwhelmed by throngs of people.

When I’m forced to visit Costco on a weekend, I’ll often forget things I need because I don’t want to battle crowded aisles. Or, I’ve been known to just grab things off the shelf that I didn’t need because I wanted to get to the checkout area sooner knowing the lines would be long.

So as a general rule, I don’t set foot in Costco on Saturday or Sunday. That way, I’m able to shop more calmly.

You may want to shop during the week if your schedule allows for it. And if the weekend is your only option, try to go on Saturday in the evening right before the store closes. At that hour, it may be less crowded due to people finishing their shopping early so they can keep their nighttime plans.

2. Make sure you have room to store everything you need

In our early days of shopping at Costco, my husband and I would routinely bring home perishables we struggled to cram into our single fridge and freezer. Since having kids, we’ve added a second fridge to our home. And that’s been a game-changer, because now, we can stock up on bulk items at Costco without having to make return trips every three to four days.

If you don’t have a lot of storage space at home, then you’ll need to be careful about how much you buy at Costco. Cramming too many things into your fridge or freezer could cause it to cool less efficiently, thereby shortening the life of your purchases.

Another thing that could be worth considering is a second fridge. Costco sells several budget refrigerators, including this one for $529.99.

That’s a large charge to put on your credit card. But imagine that without a second fridge, you’d have to limit your Costco purchases and buy more items at your local grocery store. And let’s say that as a result, you’re spending an extra $10 a week.

Well, if you buy that second fridge and it allows you to purchase more at Costco and save $10 extra per week, then your purchase will pay for itself in about a year’s time. And from there, you can reap added savings by having more leeway to load up at Costco. Also, if you have a larger family, you might really appreciate having the extra space to store leftovers.

3. Don’t assume that Kirkland products are inferior

When I first started shopping at Costco, I largely stuck to the brands I knew and wasn’t so willing to give Kirkland, Costco’s signature brand, a chance. I learned quickly that my brand snobbiness wasn’t doing me any good. Quite the contrary — it was costing me money.

These days, I’ll pretty much buy any Kirkland branded product at Costco, the only exception being paper towels because I’m extremely uptight about the brand I use. You may be inclined to walk past the Kirkland items you see on the shelves at Costco. But before you assume they’re inferior, try a few out.

Remember, Costco has an extremely generous return policy. And with limited exceptions, you can bring back items that don’t meet your standards for a full refund. So if you take a chance on a Kirkland food or cleaning product and it doesn’t work out for you, all you need to do is return that item to customer service and get your money back.

It’s hard to believe that I’ve been shopping at Costco for as long as I have. But the good thing is that I’ve picked up some helpful strategies for making the most of my membership along the way. And the longer you shop at Costco, the more tricks you might learn that allow you to maximize your savings.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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A 60-month CD is a long commitment. But read on to see why you may want to open one sooner rather than later. 

There are certain benefits to opening a CD instead of putting your money into a savings account. For one thing, a CD might pay a higher interest rate than a savings account, depending on the length, or term, of that CD.

And also, with a CD, your interest rate is guaranteed. If you sign a 12-month CD at 5% interest, you will earn 5% on your money for the year that follows. On the other hand, it may be that your bank is paying 5% interest on savings accounts right now. But that rate could fall to 4.8% next month, 4.6% the month after that, and so forth, because your rate is not locked in.

Opening a CD means making a big commitment. If you cash out a CD early, you’ll generally face a steep penalty from your bank, the exact amount of which depends on the term of your CD and your financial institution’s rules. By contrast, you can withdraw funds from a regular savings account at any time without penalty.

Meanwhile, because CD rates (and savings accounts rates) are up following a series of interest rate hikes on the part of the Federal Reserve, now’s a good time to open a CD. And you may be inclined to open a longer-term one so you can lock in a favorable rate for a number of years.

In fact, the average five-year CD rate was 4.23% as of September, according to Federal Reserve data. That’s a 400% increase over the past two years.

But is opening a five-year CD a smart move? Or is it a decision you might regret?

The upside of opening a five-year CD right now

If you’re going to open a 60-month CD, now’s a good time to do it. Not only are CD rates up, but the Fed is likely to start cutting rates next year in response to cooling inflation. Once that happens, CD rates could drop — and quickly. So you may not have too many more opportunities to lock in a rate for a five-year CD that’s as high as what you’ll see today.

Plus, as long as your bank is FDIC-insured, your CD is risk-free, assuming your deposit doesn’t exceed $250,000. It’s not an easy thing to lock in a return of 4% or more without assuming any risk.

The downside of opening a five-year CD right now

Although CDs are paying generously right now, when you put your money into one, you’re making a commitment. But a lot can change over five years. You may end up having to make costly home repairs, or you might burn out at work and need a break or career switch that you’re reliant on your cash reserves to fund. If your money is tied up in a CD, that becomes problematic.

Of course, you can technically cash out a CD early if you absolutely need that money. But then you’ll face a costly penalty that hinges on where you do your banking. At Capital One, for example, the penalty for cashing out a five-year CD early is six months’ worth of interest.

Also, while you might snag a risk-free return of 4% or more on a five-year CD right now, over the past 50 years, the stock market’s average annual return has been 10%. So you might grow your money a lot more by investing it.

Of course, with stocks, you’re also taking the risk of losing money — especially if you’re only planning to invest over a five-year period. But you should at least be aware that while a return on your money in the 4% range isn’t anything to scoff at, it’s also well below the stock market’s average return.

What’s the right choice?

All told, there are pros and cons to opening a five-year CD right now. Think about your goals and financial picture in the course of making your decision.

If you have plenty of extra cash in other accounts, then opening a 60-month CD becomes less risky. And if you have a five-year goal you’re saving for, like paying for college tuition, then a CD could be a much safer bet than the stock market.

Remember, too, that if you aren’t comfortable with the idea of a five-year CD, you could always open one with a shorter term — such as a two-year CD. That way, you’re not making quite the same commitment, but you’re still getting a pretty generous return on your cash.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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A CD ladder offers a great combination of yield and flexibility with your savings. Here are some of the benefits you should know about. 

If you’re torn between the flexibility of savings accounts or short-term CDs and the yield stability of long-term CDs, a CD ladder could be a smart savings strategy for you.

If you aren’t familiar, the basic idea behind a CD ladder is to divide your money into equal baskets, and deposit them into CDs of different maturity lengths. For example, if you have $20,000 in savings, you might split it into five baskets of $4,000, depositing $4,000 into a one-year CD, $4,000 into a two-year CD, and so on.

By doing this, you’ll have one-fifth of your money maturing every year so it isn’t completely tied up for the long term, but you’ll also lock in longer-term fixed yields with most of your savings. As your shorter-term CDs mature, you can roll the money into a new longer-term CD to take advantage of the current long-term CD yields.

With that in mind, here are three reasons you might want to use your savings to create a CD ladder today.

1. Create a reliable income stream

Savings accounts can have excellent yields, especially in the current environment, but they aren’t guaranteed for any length of time. For this reason, savings accounts make lousy income investments.

On the other hand, a CD ladder could be an excellent way to create an income stream. Many (but not all) banks give you the option to withdraw interest payments as they come into the account, so if your bank allows this, a CD ladder could be a smart way to create a steady income stream without much risk.

2. Maintain flexibility if rates rise

In normal interest rate environments, longer-maturity CDs tend to have higher yields than shorter-term CDs. Of course, with the rapidly rising rate environment of 2022 and 2023, shorter-term CDs generally pay a little more than longer-term CDs, but one of the benefits over time is that some of your money will be available to roll into longer-term CDs every year or so.

On the other hand, you also have the flexibility to roll the maturing CDs into whatever makes the most financial sense at the time.

For example, let’s say you created a CD ladder one year ago and your one-year CD is now maturing. Because the best yields as of this writing can be found in shorter-term CDs, you have the option to roll that money into a new one-year CD if you choose to do so.

3. Plan future access to your money

Not only does a CD ladder give you the flexibility to take advantage of rising interest rates as your money matures, it also gives you regular access to some of your savings if you need it to cover large purchases or living expenses. For example, a CD ladder could be a smart tool to use if you want to lock in high yields but have a large expense — say, college tuition — coming up at regular intervals.

There are drawbacks to CD ladders as well

Finally, it’s worth mentioning that just like most financial products and strategies, CD ladders aren’t perfect, and they aren’t right for everyone. Specifically, it’s impossible to predict interest rates with any degree of accuracy and a CD ladder might not always be the best overall yield.

For example, you can get the best yield right now by using shorter-term CDs, and if rates continue to rise, you’d be better off with all of your money maturing within a year and then putting it into higher-rate CDs. However, there’s also the possibility that rates could collapse over the next year and you’ll be out of luck when your accounts reach maturity.

The bottom line is that CD ladders are an excellent combination of maximum locked-in yield and flexibility with your money. If that sounds like it could fit your goals, a CD ladder could be the right move for you.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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