How Your Costco Gas 'Hack' Costs You More in the Long Run
Getting gas at Costco can definitely seem like a financial win; you pull in, pay less at the pump and leave feeling like you found a loophole in the system with gas that’s cheaper than almost anywhere else.
In many ways, you did save money. Costco is known for offering lower gas prices than many competitors, making its fuel stations one of the biggest reasons that members visit their pumps.
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There is, however, a catch.
That cheap gas isn’t just about helping you spend less on fuel. It’s also a strategy to get you through Costco’s doors; once you’re inside, your “quick gas stop” can turn into a much bigger — and costlier — shopping trip.
Costco’s Cheap Gas Is Designed To Bring You Back
According to MoneyWise, Costco doesn’t make huge profits from selling its discounted gas. Instead, the company benefits from what happens when that fuel brings members into close proximity to the store.
During a recent earnings call, Costco CFO Gary Millerchip claimed that the nation’s gas prices have become a major concern for Costco members and that has played a much larger role in overall member spending lately.
“When we look at our members that are engaged in gas with us, they are generally visiting more frequently overall,” Millerchip said. “They are spending more with us overall and they are also renewing at a higher rate.”
In short, Costco gas works more as more than just a way to fill up your tank on the way home. It helps create regular warehouse visits and more opportunities for members to shop. Per the grocery giant, a little under half of its members who stop for gas also visit the warehouse during their trip.
How Costco Gets You
Costco has used a similar strategy with other popular products, too.
The company’s rather famous rotisserie chicken, for example, has remained at the same low price for years, so much so that it’s considered a “loss leader” — an item priced so attractively that it encourages customers to visit the store more often.
It’s a simple plan: A great deal gets you inside the store. Once you’re there, you’re now surrounded by thousands of other attractive and tempting products. One cheap item lures you in and, once there, you’re likely to spend much, much more.
How To Save Money on Costco Trips
None of this means you have to stop using Costco gas to protect your budget. You just need a plan.
If you’re only going there for fuel, consider skipping the warehouse entirely, as a few minutes browsing the aisles can quickly turn a money-saving trip into an expensive one.
If you do need to shop, then be sure to make a list before you arrive and then stick to it. Planning your purchases ahead of time can help you separate actual needs from impulse buys.
Additionally, shopping with someone else, someone who keeps you accountable, can also make it easier to stay on track.
The best Costco hack isn’t just finding cheap gas. It’s knowing when the savings stop and the impulse purchases begin.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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