The Costco Cash Back Benefit That Sam's Club Can't Compete With

It's no surprise that both Costco and Sam's Club offer great perks and deals to shoppers, providing per-unit prices that many traditional retailers can't match, along with a host of other benefits. But when it comes to cash-back rewards connected to membership, does Costco offer something Sam's Club can't compete with?

Both bulk retailers offer their highest-tier members a 2% cash-back rewards program. At Sam's Club, members can use their rewards on in-store or online purchases, and also have the option to cash them out or use them toward updated membership fees. These reward amounts can be redeemed once a month. Costco allows you to redeem rewards once a year, and you can use the rewards for in-store or online purchases. While you have more ways to use the rewards at Sam's Club, shoppers can benefit from an extra $500 in cash back annually at Costco. Is this actually a better offer for all shoppers, though?

With so many consumers looking for ways to save money on groceries, finding the best deals both in terms of on-shelf prices and membership perks is becoming increasingly crucial. To help, we're here to break down exactly what each membership offers and whether opting for Costco's cash-back program really is the best deal.

Wholesalers offer exceptional deals, but most require a membership to benefit. Costco's options include Gold Star and Business memberships at $65 per year, and Executive membership for $130 per year. Sam's Club provides two choices: Club membership for $60 per year and Plus membership for $120 per year. Sam's Club also frequently cuts first-year membership fees by over 50%.

In both cases, the higher-priced memberships get you more perks. For example, Costco Executive Membership perks include 2% cash back annually (up to $1,250), along with access to early shopping hours and a $10 monthly credit on same-day delivery orders of at least $150. Sam's Club Plus Membership also offers 2% cash back but only up to $750, meaning you stand to gain $500 more at Costco.

The seemingly obvious benefit of a Costco membership over one at Sam's Club is the extra cash back. One thing to consider is that you must spend $62,500 on qualifying purchases at Costco to receive the maximum of $1,250. To get the full $750 at Sam's Club, only $37,500 of qualifying purchases is required. While you pay slightly more for a Costco membership, the potential for an additional $500 of cash back makes it worth it if you spend over $37,500 a year. 

Outside of cash back, Sam's Club and Costco membership benefits are fairly similar. If you frequently place online orders over $150, the monthly $10 reward at Costco may be appealing, whereas free shipping on orders $50 or more at Sam's Club could be preferable if you place smaller orders online. Otherwise, choosing between the two primarily comes down to preferences related to product ranges, pricing, and location.