Why I Won’t Pay a Fee to Shop at Costco

My husband loves Costco. Many of our relatives love Costco.  Our friends often tell us they are about to go out “on a Costco run.” I think I may be the only person in this neighbourhood who doesn’t “get it.” I think Costco is ok but I won’t pay a fee to shop there.

At the end of this month our Costco membership is expiring. We bought the membership last year so that I could get snow tires I liked, in stock, at a good price, and installed for our new Camry. The savings more than paid for our annual fee (especially since I had a promotional rate for a new membership.) This year, though, we don’t need anything that could generate a similar saving so we’ll be letting our enrollment lapse. Today I’ll make one last tour of the store to see what I’ll be missing.

Why Costco Doesn’t Work for Me

This is all about me. I realize it may be very different for you!

Costco Every Day Low Prices are Not Quite Low Enough

I’ve been a pricing cycle shopper since the university days when I had to budget to the penny. I am basically at the point where I can sense whether it’s facial tissues or bagels that will be coming on sale this week and at which stores. Because we have the luxury of extra money in our budget, I can afford to pre-buy enough staples and dry goods to last from one sale till the next.

So why would I want to buy canned soup, flour, cocoa powder or tissues at Costco? While their prices are good compared to smaller stores regular (read: high) prices, they are no better than those same stores’ sale prices. In fact, Costco’s prices are often higher than the sale prices I pay at the regular grocery stores.

Costco Bulk Packaging Is Too Large

I like some of the buns Costco bakes. Unfortunately, no one else in my immediate family does and none of my extended family lives very close. So I can buy a package but I then either have to freeze several dozen buns, or throw the stale ones out. Neither option appeals to me. (I did give extra buns to neighbourhood friends several times but it feels strangely awkward wandering around offering half-bags of buns or quarts of strawberries.)

Other items are just ridiculously large. Why would I want 4 boxes of baking soda? It takes the rind and juice of one lemon to make my lemon loaf, so why would I want a bag of lemons? I looked at aluminum foil today and tried to think how long it would take me to use 300 feet. (Especially since I ask myself every time I reach for foil whether this use justifies the strip mines for bauxite in South America.)

Costco Photos From Our Location Didn’t Match Walmart for Quality

Admittedly I haven’t tested photo prints in over a year, so I probably should send a few again to check if anything has improved. But just over a year ago I needed quite a few prints of the same few photos. So I sent a batch online to Costco and a batch online to Walmart. I selected Glossy for both stores. The Walmart prints were noticeably crisper and brighter than the Costco ones. The price was the same.

I’m sure the photo equipment probably varies from store to store. This information likely only applies to my closest Walmart and my closest Costco.

Our Costco Has a Terrible Cash Register System

I think it’s just our Costco but anytime I’ve shopped there I’ve always had to line up for at least 10 minutes to get to a cash register. That includes weekdays and weekends, daytime and evening. That’s just sad.

Again, that doesn’t mean it’s like that at other stores. But I’m not basing my decision on whether to renew or not on whether people in, say, Kingston can get through the checkout in two minutes.

I’m a Brand Buyer and Costco Often Does Have What I Use

As someone who has shopped for a family for over a decade, I’ve fallen into buying patterns. There’s a soap I buy because it doesn’t cause skin irritation for two of us. Costco has products by the same company, but not the version I find works best. There’s a kind of boxed soup stock I like to use when I’m in a hurry in my Minestrone recipe. Costco again has the same brand, but it only has the 0% salt version, and I prefer the 30% salt one. (Er, 30% of the amount of salt used in the original version of the boxed broth; it’s not actually 30% v/v salt!) The same story repeats for shampoo, cocoa powder, and honey.

Sometimes Costco even stocks the exact brand and formulation I want. That’s great; until I go back to get more and they’ve sold out and aren’t replacing it.

It’s just a nuisance that I prefer not to deal with. By shopping at other retailers I can get exactly what I want every time I walk into the store.

Reasons Why I Would Shop at Costco If There Was No Annual Fee

There are many things I like about Costco. It’s just the $55 that bothers me.

Costco’s Return Policy is Great

I agree that Costco has a great return policy. As a very careful shopper, though, it’s extremely unlikely that I would buy something anywhere that cannot be easily returned.

Costco Has Some Very High Quality Exclusive Offerings

I agree that some items Costco sells are not available elsewhere and for some of them it’s worth paying a premium. For example, I have relatives who can get great steaks at their Costco every time they shop there.

Costco Has Good Pharmacy Pricing

Luckily, I don’t really know this first hand as, touch wood, we haven’t needed any prescriptions and so on in years. However, I’ve read many places that Costco has very good prices for prescription and even over-the-counter medications. If I’m wrong about that, please leave a comment.

Costco Pays a Living Wage

Again, I only have this information anecdotally so it could be wrong, but I’ve been told that Costco pays its staff a more reasonable wage than many retail stores. That counts as a positive for a store for me.

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Are you a member of the Costco cult? Or is it just another retailer? Please share your views with a comment.

How Do I Start Getting $9.95 Trades at RBC Direct Investing Now I Have $50 000?

UPDATE: This article is historical, from 2013. I no longer invest with RBC Direct Investing.

While on the phone asking where my money is, since it left ING Direct on November 7 and it still isn’t in my RBC DI account on November 14, I asked a more important question: “How do I start getting the $9.95 trading commission fee given that I will have $50,000 in my account.”

I remember several years ago when we set up accounts at BMO InvestorLine that we had to wait till month-end after reaching the minimum qualifying balance to get the reduced trading fee. (I suspect you can now phone them and ask to get the fee applied immediately once you qualify, but I’m not sure.) I wasn’t sure if we would have to wait with RBC DI as well or not.

When Will You Usually Get the Reduced Trading Commission Fee Rate at RBC Direct Investing?

The support person told me that generally the computer system will spot new qualifiers. The check is made once a month on the 22 nd day. It checks what the lowest balance was during the previous month. [Which is not what the website says. The website says it will check the asset balance on the last day of the previous month.] If the lowest balance was $50,000 then the account will be upgraded to $9.95 trade status.

Can You Get the $9.95 Rate Immediately at RBC Direct Investing?

Yes. Once you have the $50,000 minimum in your account you can phone RBC Direct Investing support and request a change. They should be able to update your account quickly. (They didn’t tell me *how* quickly, but the implication was it would happen overnight.)

I guess if my money ever arrives in my account I can test this!
UPDATE: It did; I can; and I did. The update was made over night. So the day after I phoned in, when I placed a test trade, the trading commission correctly reported as $9.95.

What Happens If the Market Value of my Portfolio Drops Below $50,000?

While I’m sure your stocks, ETFs and Mutual Funds will always go up in value, mine don’t. In fact, I tend to buy things right before they plummet in value.

So I sent a Secure Message to RBC DI to ask whether the $50,000 qualification applies to the Book Value (when I bought my stocks) or the Market Value (what they’re worth today). I waited with bated breath for their reply.

To my surprise and dismay, they replied “In order to qualify for preferred pricing of $9.95 you must hold $50,000 in market value on the last day of every month.”

That’s right: the *Market* Value of the account must be $50,000 or higher on the last day of every month to qualify for the $9.95 trading fee! So if your stocks take even a temporary dip on the last day of the month you will be back to $28.95 trading fees. It appears that changes in the fees, up or down, occur on the 22 nd of the month after the month-end balance went below or above $50,000.

Frankly, I’m not impressed.

Can I Get the $50,000 Discount by Adding Up My Accounts with my Spouse’s?

Yes. You can ask RBC DI to add up the assets in various accounts held by members of the same household such as you and your spouse. You have to phone them to ask them to do this. It is not automatic.

Where Do I Get $50,000 to Qualify

Of course the hardest part is coming up with the $50,000 to invest in the first place. That’s a lot of packed lunches and skipped designer coffees. With time and patience, though, you may get there sooner than you think.

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Did you get caught paying an excessive brokerage fee because you thought you’d get the better rate immediately once you qualified? Please share your experiences with a comment.