Costco Just Announced Membership Fee Hikes. Is Sam's Club Next?
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If you're a loyal Costco fan, get ready for a bit of bad news. Starting Sept. 1, the cost of a Costco membership is increasing for the first time in seven years. If you're currently paying $60 a year for a Gold Star membership, prepare to spend $65 once Costco's fee hikes take effect. And if you're an Executive member, your $120 fee will increase to $130.Of course, Costco isn't the only big name in the warehouse club space. Sam's Club has long been a huge Costco rival. And at a lower price point for memberships, it's easy to see why Sam's Club is able to take some of Costco's business away.But now that Costco has announced a membership fee hike, it raises the question: Will Sam's Club follow suit?It's possible -- but unlikely. Here's why.It's not the right time for a Sam's Club fee hikeIt can be argued that Costco's fee hikes are coming at a bad time for consumers. Inflation is still a problem, and many people are spending more money than ever to put food on the table -- even with the discounts they're able to snag at Costco.At the same time, though, Costco is long overdue for a membership fee hike. The warehouse club giant last raised fees in mid-2017, which means members have gotten a seven-year reprieve.RELATED: The #1 Strategy for Saving Money at CostcoIt's a different story for Sam's Club, though. Sam's Club's most recent membership fee hike came in October of 2022, when the cost of a basic membership rose from $45 to $50 and a Plus membership increased from $100 to $110.Because of this, it's highly unlikely that Sam's Club would opt to raise membership fees roughly two years later. A move like that could result in some serious customer backlash.Also, the fact that Costco is raising its fees could work to Sam's Club's advantage. Assuming Sam's Club prices hold steady, there will soon be a wider gap between the cost of joining there versus Costco. That could drive more budget-conscious customers to Sam's Club.Should you join Costco or Sam's Club?A Sam's Club membership costs less than a Costco membership. But unless money is extremely tight, your best bet is to look beyond membership fees when deciding which warehouse club store to join.One aspect it definitely pays to focus on is convenience. If you have a Costco location five minutes away while the nearest Sam's Club is a 25-minute drive, then Costco should probably be your choice on the basis of location alone.Also, if you're already a loyal Costco fan, you shouldn't necessarily jump ship and switch to Sam's Club because the cost of your membership is rising. You may not find the same selection of products and services at Sam's Club as what Costco offers. So if you're happy with your membership now, don't let an extra $5 or $10 a year prompt you to make a change.However, if you have a Costco and Sam's Club in your neighborhood that are equally convenient and you're new to the world of warehouse club shopping, you may want to find a friend or neighbor you can join on a visit to both stores. That way, you can walk around, check out the inventory, take notes on item pricing, and see which one makes the most sense to join.Of course, there's no rule stating that you can only have one warehouse club membership. But joining Costco and Sam's Club at the same time may be overkill. So a better bet is to do a walkthrough of each store to see which one you get a better vibe for overall, and to run the numbers to see which store will ultimately result in the most savings.Top credit card to use at Costco (and everywhere else!)
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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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