Costco Just Got Rid of This Major Perk, as of This Month
This has been in place since March 2020.
As with every warehouse club, a membership to Costco Wholesale comes with a variety of benefits. Shopping in bulk tops that list for many, as well as more affordable fuel prices when you fill up at a Costco Gas Station. But while Costco members value the reliability of warehouse shopping, these stores sometimes end up changing their policies—and that could leave you without a service you'd been counting on. Read on to find out about the latest change the wholesale club just announced, which went into effect May 1.
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Last month, Costco announced they were getting rid of a different policy.
In April, Costco announced that it would no longer be offering special COVID senior hours for in-store shopping. The hours, generally held between 9 a.m. and 10 a.m. on Tuesdays and Thursdays, were put in place in March 2020 in order to allow at-risk shoppers and frontline workers to browse safely and lower potential COVID exposure. The hours were nixed as of April 18, 2022, and the wholesaler recommended shopping online in the event high-risk individuals still did not feel safe shopping during regular operating hours. Now, another policy that has been in place since 2020 is ending, Costco announced.
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If you're buying a home and are a Costco member, you could be affected.
Buying a home can be stressful, especially with the effects of inflation and rising interest rates. Many homebuyers shop around for lenders that can secure the lowest rates, but Costco will no longer be an option to consult.
Effective May 1, Costco won't be offering its mortgage program to members, the company announced on its website. As reported by Eat This, Not That!, Costco launched the program in 2020, and while some Reddit users are speculating on its connection to the state of the housing market, the retailer has not provided a reason for ending the program.
According to Costco's website, members who have a current mortgage application or loan should contact the lender they've been working with. The website lists eight lenders that were a part of the program, including Box Home Loans, CrossCountry Mortgage, Lending.com, Mutual of Omaha Mortgage, NASB, NBKC Bank, Real Genius, and Strong Home Mortgage.
Costco helped control lender fees for loan transactions.
The wholesale club capped fees that were connected to lender transactions, Eat This, Not That! reported. And while Costco wasn't a lender—of directly involved with the mortgage process—with the program cap, those who used the mortgage program would pay 1 percent on their loan. Additionally, for Executive members, Costco capped lender origination fees at $250. For other members, fees were capped at $550.
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Experts also anticipate the price of Costco memberships increasing.
In addition to the loss of the mortgage program, prices of Costco's membership fee—which you must have in order to shop there—might also see a price hike later this year. As reported by Forbes, the last increase was in June 2017, and increases have historically occurred every 5.5 years. Annual membership prices are anticipated to mirror the inflation number, which is currently between 8 and 8.5 percent, which means that the Gold Star Every Day membership will be increased by $5 (from $60 to $65), and the Gold Star Executive Membership will be raised by $10 (from $120 to $130).
Costco has not formally announced an increase in annual membership prices, but Richard Galanti, chief financial officer for Costco, did speak about the five-year timeline for increases. "On average, they were done about every five—a little over every five-and-a-half years, about five years and seven months," he said during an earnings call on March 3, 2022, The Street reported. "And five years from the anniversary of June of '17 would be this June. So I think the question will continue to be asked until we do or don't do something."
Another affordable retailer recently launched a mortgage program.
If you were counting on Costco to help you secure a lower interest rate, you'll be happy to learn that Walmart is now providing mortgage options. The retailer has partnered with Lenders One Cooperative to open "store-in-store" branch locations, according to a March 2022 press release. At that time, three locations were under a lease, with the partnership "offering mortgage solutions including, purchase, refinance, and home equity lines to customers."
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