The Dow hits an incremental high amid rising volatility >>> READ MORE

The Pros and Cons of Shopping Club Memberships

Paying annual fees gets you access to perks and better prices

   

If you’ve never been inside a membership warehouse store — such as Costco or BJ’s — then you’ve probably wondered what the fuss is all about. Sure, friends tell you about the deals they snag at these discount retailers, but you aren’t quite sure if the annual fee is worth the payment. Let’s try to set the record straight.

Membership clubs are essentially large warehouse retailers that you pay an annual fee to join. In exchange for the fee, you gain access to better deals and bulk pricing.

The most popular membership clubs are national chains Sam’s Club, as well as Costco and BJ’s. While prices vary depending on the store and the area of the country in which you live, the average fee is around $50 per year.

As with any sort of membership, there are pros and cons to joining. Until you understand each of these factors, you can’t make an educated decision.

So, let’s take a closer look.

The Pros

  • Grocery savings. According to research gathered by The Penny Hoarder, prices tend to be 29%-33% lower at membership clubs, on average, than large supermarket chains. As a result, the average family that spends $150 per week at the supermarket can save more than $2,000 per year.
  • Additional perks. Membership clubs don’t just sell products. Many also offer things like discount gas, car maintenance, health screenings, and other convenient perks. One of the best parts about this is that you can shop while you’re waiting on results. Nothing like saving time and money at the same time!
  • Positive shopping experience. You’ll find that shopping at a membership store is usually a much more positive experience than at a supermarket. The aisles are wider, there’s room to move around, and there are typically free samples.
  • Big-ticket deals. The wonderful thing about warehouse membership clubs is that they also sell big-ticket items like jewelry, tools and electronics. If you’re already planning on making one or two big purchases in the next year, a membership certainly makes sense.

The Cons

  • Annual fee. For some people, the idea of paying a fee just to have the right to purchase products isn’t particularly enticing. A $50 fee isn’t a lot if you shop there regularly, but can be costly if you only visit a couple of times per year.
  • Mostly bulk purchases. Membership stores thrive on selling bulk items. This means you won’t go into the store just to buy a can of Pringles; a 12-pack of the chips might be more likely. If you’re a household of one or two, you might not need to buy in bulk.
  • Limited locations. Whereas major supermarket chains may have three or four stores in your vicinity, there’s probably only one (maybe two) membership club locations in your area. This can make it less convenient to go shopping.
  • Coupon restrictions. Most membership clubs don’t accept manufacturer coupons or run sales. They claim to offer low prices all year round, but this can be frustrating if you find a good coupon and want to use it to get an even lower price.

The Final Verdict

The jury’s still out on whether shopping club memberships are a smart financial move. It ultimately comes down to your individual situation. If you have a large family and are looking for ways to save money on weekly groceries, the upfront membership fee can be accounted for rather quickly.

However, if you live by yourself and there aren’t any locations nearby, you’ll find that it probably isn’t worth your time or money.

More From InvestorPlace


Article printed from InvestorPlace Media, http://investorplace.com/2017/05/the-pros-and-cons-of-shopping-memberships/.

©2017 InvestorPlace Media, LLC