Are premium warehouse club memberships worth it?

Any member of Costco or Sam's Club has heard the pitch at the checkout: "Would you like to upgrade to a premium membership for a small fee?" The "small fee" is slightly misleading because the employee usually only mentions a pro-rated amount until your membership renewal date. For a full year's membership, Costco charges $100 for its Executive level; Sam's Club charges $100 for its Plus membership.

Both warehouse clubs tack on plenty of perks for the additional $50 or $60, but most Costco members join only for the 2 percent cash back on all purchases made at the club ($500 maximum payout per year). This is in addition to the cash back that Costco members get for purchases on their American Express card. Sam's Club members get 2 percent back on a Discover card, but only after they spend more than $10,000.

Members who spend about $2,500 a year at Costco will be able to recoup the additional $50 fee. Those who join but don't spend enough to get the cash refund of $50 at Costco or $60 at Sam's Club can get it returned at renewal.

If you want to see how much you spend at a club in a year, ask at the service desk, but a Costco employee who commented online warns that the spending total includes gas purchases, which cannot count toward the 2 percent rebate since members already get a 3 percent rebate on their American Express card. Other purchases that don't accrue rebate dollars are cigarettes, cash cards, postage stamps and some Costco.com transactions.

Neither Costco nor Sam's Club would comment on the percentage of members who upgrade, but 60 percent of Costco's total sales come from Executive members, Chief Financial Officer Richard Galenti said in a conference call last year.

When I asked readers to tell me about their experiences with premium memberships at either club, I heard only from Costco Executive members. All of them e-mailed that they are very satisfied and have no regrets.

Joe Zahner of St. Louis Park thinks the $100 membership is worth every penny.

Linda Rust of Minneapolis saves more than the $100 fee each year, too. She says that a regular membership doesn't pay for itself, but with the 2 percent rebate on nearly all purchases, the Executive membership does for her. Some Costco Gold Star members ($50 per year) might argue that the rebate on the American Express card pays for membership, but the American Express rebate of 1 percent of total purchases (3 percent on Costco's gas) is in addition to the 2 percent Executive rebate.

Zahner and Rust, like most readers who wrote in, have not taken advantage of the other perks offered with the premium memberships, which include auto and home insurance. I suspect that many comparison shoppers aren't finding the extra deals all that great. For example, I called to get an auto insurance quote from Ameriprise as sold through Costco, but even with the additional discounts, my policy through Western National is about $70 cheaper per year.

Gail, from Atlanta, was the only reader to say that she used the auto purchase discount program. Although it is available to any member, Executive members get an additional $50 off. An inveterate negotiator, Gail said she shopped around and then found that Costco's prices through her local dealers beat her best negotiated price by $350 to $500 on a Volvo XC90 and a Ford Explorer Sport Trac.

Since no fans of Sam's Club Plus program contacted me, let me put in a plug for its eValues coupon program, launched a year ago. As a new Plus member, I went to the kiosk in the warehouse to check out the current coupons. Most were for $2 off, including Member's Mark chicken breasts, ground beef, fresh cantaloupe or pineapple, and Ultra Downy. Coupons of $10 and $25 off were on the Sinomax Memory Foam mattress topper and Athra Sterling Silver jewelry. These offers are good through Sunday. Past offers have included $50 off a plasma TV. Best of all, it's a clip-free system. Discounts are automatic at the register.

Most members seem more attracted to the cash rebates than additional perks. If you have attempted to take advantage of additional savings on health insurance, travel or brokerage services, for example, let me know. As I continue to use these services with my new membership, I will report back on the savings or lack thereof.