I wouldn’t suggest becoming a member of Costco just for this particular benefit, but if you are already a member and looking for a place to stash your cash, you can consider Capital One. Capital One’s direct banking department is offering a 3.2% APY compared to 3.0% APY for non-members on the bank’s money market account.
Membership costs $50, so unless you intend on earning more than that on the 20 basis point advantage, signing up for Costco membership to earn this higher rate doesn’t make sense. Even if you are already a member, there are a number of banks offering higher interest rates.
If you are an “Executive Member” of Costco, a benefit that costs $100 each year, you would qualify for this rate plus a $50 bonus if you deposit more than $5,000 into the Capital One money market account.
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I’m not a Costco member, but I’ve been thinking that membership may be worthwhile just to get the benefits offered by their American Express (aka TrueEarnings) card; the Capital One interest bonus may be an additional incentive provided that a) its rates stay competitive, and b) you’re not a rate-chaser.
Here’s my thinking on the card…as I understand it, the TrueEarnings card serves as both your Costco membership card and a regular Amex credit card that’s usable anywhere, so that you get two uses out of a single $50 annual fee. Then, the Amex card offers 3% cash back on gasoline and restaurants, and 1% on everything else. In my case, this means that since I already spend more than $1,667 annually for gas ($32/week) commuting to/from work, I get my membership fee back by doing nothing more than what I’m already doing anyhow. Is this sound reasoning? Are there any gotchas I didn’t think of?
Anyway, here’s a link to the Costco Amex page: http://www.costco.com/Service/FeaturePage.aspx?ProductNo=11264812