Wholesale clubs like BJ’s, CostCo, and Sam’s Club charge you an annual membership fee for the privilege of shopping at their warehouse stores. These fees may range from $45 to $110.
The higher, or premium, memberships may include perks such as annual rebates (currently 2% for CostCo and BJ’s) and special discount offers. The clubs use your membership fees to underwrite their administrative costs and, if you don’t shop very often, increase their profits.
Wholesale clubs don’t always offer the best prices on products but if you shop at a wholesale club frequently then you will have the opportunity to purchase many goods unavailable at other stores. And like all retail stores the wholesale clubs do offer discounts on many items, so you can save money if you shop wisely.
Merely saving money through discount prices and coupons, however, is not the same as earning money. The only way you can earn money on a wholesale club membership (other than to buy items there and then sell them for more elsewhere) is to take advantage of the rebates offered on premium memberships.
Assuming you buy only necessary items that you would normally buy at any store (primarily gas and groceries) then you’re not going to make money on discounted prices because everyone else in the club gets the same discount. But the rebates that are provided to premium members may be sufficient to pay the annual membership fees. And if you spend a LOT of money at the wholesale club, you may actually receive a larger rebate than you need to cover your membership.
If the wholesale club offers the best prices for the things you buy in your area (again, mostly gas and groceries) then the rebate is similar to earning interest on your checking account. Cashing in a rebate is not the same as performing a service or selling a good to generate revenue — it’s more like using float to make money but in this case you are floating a small loan to the wholesale club (your membership fee) with the expectation that they will rebate you more than your membership on your renewal date.
The wholesale club may exempt some purchases from its rebate program so be sure you read and understand the rules governing wholesale club rebate plans. To earn a $110 rebate (which just covers the cost of the most expensive premium membership currently available) you have to make $5500 in eligible purchases over the course of 12 months.
That works out to about $460 a month, which is less than an average family spends on food each month. Most families should, in fact, be able to earn back their wholesale club memberships just by making grocery purchases on a regular basis. Some wholesale clubs also apply your gasoline purchases toward your rebate. In 2012, families spent on average about $2500 for gasoline.
You may not be able to buy everything you need at a wholesale club. They also sell items in bulk and you should make sure you can use them and store them. But because you buy many items in bulk you won’t buy them as often as you would when you pay for smaller versions at regular retail stores.
Wholesale club memberships work best for homeowners who buy furniture, outdoor items, and other large purchases. However, even if you rent you can still find great deals on consumer electronics, food, and clothing at local wholesale clubs.