Dave Ramsey warns shoppers to avoid Costco trap
There's a reason Costco boasts a 92.2% member renewal rate across its U.S. and Canada stores.
Costco members can enjoy massive savings on everything from groceries to cleaning supplies to food court meals.
Plus, Costco has a way of making members feel valued. From its generous return policy to its inflation-proof hot dog deal, the company does a great job of making shoppers feel like they're getting their money's worth.
Of course, these days, a Costco membership offers even more value given the fact that prices are rising everywhere.
In May, the Consumer Price Index rose 4.2% year over year. Costs rose across major categories like food, shelter, and medical care services.
And given that gasoline prices rose 40.5%, the fact that Costco lets drivers fill up their cars on the cheap is a major selling point.
But there's a big trap Costco shoppers tend to fall into. And financial influencer Dave Ramsey warns that despite the potential savings, members risk costing themselves money instead of getting to save it.
Ramsey issues big warning to Costco members
Financial influencer Dave Ramsey knows how easy it is for consumers to rack up a mountain of debt – especially these days, given how strained budgets are.
Ramsey is not necessarily against taking advantage of the bulk discount model warehouse club stores like Costco offer. But he does think the warehouse club giant makes it all too easy for members to overspend.
Related: Costco just made a major move to fix a member pain point
And that's actually intentional.
Costco purposely loads its shelves with exciting new items so that members are tempted to spend more. The company actually owns up to that tactic and isn't afraid to hide it.
During Costco's third quarter 2024 earnings call, CEO Ron Vachris said, "And again, it goes a lot of times with that treasure hunt… You’ve heard the phrase, people come in to spend $100 and walk out with $300. That’s because our buyers and our operators do a great job in making the warehouses exciting.”
Ramsey, however, knows that this is why consumers get into trouble. His advice?
"Don’t get sucked into buying stuff you don’t need," he says. "Even though it might seem like a pretty good deal, if it’s going to derail your budget, it’s not worth it, folks."
Considering that Americans have a collective $1.252 trillion in credit card debt as of the first quarter of 2026, according to the Federal Reserve Bank of New York, avoiding extra purchases at stores like Costco is pretty crucial right now.
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Ramsey says even bulk buying doesn't always make sense
Costco members who come to the store for bulk savings and don't make impulse purchases aren't necessarily guaranteed to avoid debt either, though.
The problem with Costco's model is that it's not particularly friendly to cash-strapped consumers, even though it might seem to be.
To take advantage of the savings offered at Costco, consumers need to shell out the money to buy things in bulk. But for those who don't have the money to buy 32 rolls of toilet paper at once, putting an expense like that on a credit card, carrying a balance, and paying interest often negates the bulk savings.
That's why Ramsey also says, "Don’t feel the pressure to buy in bulk if the up-front cost doesn’t make sense for your budget."
More Retail:
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- Costco makes major investment in online shopping for members
In fact, budget-constrained consumers may be better off avoiding Costco and focusing on dollar stores instead, where smaller package sizes allow them to take advantage of low prices without having to shell out a bundle of money up front.
Maurie Backman owns shares of Costco.
Related: Costco just lowered prices on key items
