With Lisa Gerstner, Contributing Editor of Kiplinger’s Personal Finance
Steve speaks with Lisa Gerstner of Kiplinger’s Personal Finance about a recent article she wrote on the “Best Financial Services at Warehouse Clubs.” While most of us think of warehouse clubs, such as BJ’s, Costco and Sam’s Club, as great places for cheap prices on food, groceries, appliances, etc., they also offer a host of financial services at significant discounts that aren’t available anywhere else.
Buy a Car Through Your Warehouse Club
For example, members can purchase cars through warehouse clubs at low pre-determined prices so they can avoid the hassle of haggling with a dealer. Costco connects members with a dealer in your area based on the kind of car you want. Sam’s Club works through TrueCar, which offers price transparency and connects buyers with local dealers that carry the make and model you’re looking for. BJ’s car program works a bit like Sam’s Club where you pick the car you like on BJ’s website, see which dealers in your area offer this car, and have the dealer contact you if you’re interested in the car.
As part of their financial services, warehouse clubs also offer credit cards with attractive cashback terms and rebates. Lisa says Sam’s Club offers a credit card with 5% cash back on up to $6,000 spent yearly on gas, 3% on dining and travel, and 1% on everything else.
Costco offers 4% back on up to $7,000 on gas, 3% on dining and travel, and 2% on Costco purchases, and 1% on everything else. BJ’s offers good in-store rebates, with either 5% or 3% back on BJ’s purchases (depending on your membership level), 2% on restaurants and gas stations, and 1% everything else.
In addition, warehouse clubs offer discounts on gasoline purchases.
Identity Theft Protection
Steve was a little surprised to learn that warehouse clubs offer identity theft protection. According to Lisa, Costco works through a program called Complete ID which is affiliated with the recently hacked credit agency Experian. Complete ID monitors your credit reports and looks for suspicious activity, such as new accounts opened in your name, and alerts you to fraudulent activity. Sam’s Club has partnered with LifeLock and offers 20% – 25% off based on your membership level, with three different packages to choose from.
Lisa says Costco financial services offers the widest range of insurance options with discounted coverage for dental, auto, homeowners and life insurance, through a partnership with Ameriprise. Executive members get a few extra perks too, like roadside assistance with auto insurance.
Lisa recommends warehouse clubs to small business owners for business insurance and adds that clubs offer additional discounts if you purchase multiple policies through them.
To Steve’s surprise, warehouse clubs’ financial services include tax preparation. However, Lisa recommends going with a local accountant instead for the face-to-face interaction and potentially lower fees.
Steve likes the fact that warehouse clubs put a cap on fees for mortgage lending. Lisa says Costco offers mortgage shopping where you can see rates from Costco’s lending partners. Even so, Steve recommends shopping around and looking at online sources, such as Bankrate and LendingTree, to see if you can get a better deal.
In wrapping, Steve wants to know what it costs to join warehouse clubs. Lisa says BJ’s charges $50 or $100 per year depending on the membership level that you want. Costco is $60 or $120 for regular membership and more for business members. Sam’s Club charges $45 or $100.
Finally, Steve recommends Kiplinger’s for tips on personal finance and other economic topics relevant to all of us.
Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital. Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.
Steve Pomeranz: Ever wonder whether those large buying clubs like Costco and BJ’s offer significant savings on things other than your basic 15-pack of paper towels and 40 pounds of dog food? Well, Kiplinger has come to our rescue and Lisa Gerstner is with me to talk about it. Hey, Lisa, welcome back to the show.
Lisa Gerstner: Hi, thank you for having me.
Steve Pomeranz: So, are there greater savings on other items?
Lisa Gerstner: Yes, so the warehouse clubs offer all kinds of other financial related services, and you can often get a discount. Sometimes they offer their own where they come up with a program themselves and sometimes, often really, they contract with other services, like LifeLock or insurance companies and you’ll be able to get discounts that you wouldn’t be able to get otherwise if you went through these programs through other avenues.
Steve Pomeranz: You don’t really think about buying large items in a Costco or a BJ’s. For example, can you buy a car through these companies?
Lisa Gerstner: Yes, actually, BJ’s, Costco, and Sam’s Club all offer car buying services. So, what this means is if you really hate to haggle or you don’t like going to a dealer and having kind of that confrontational aspect of trying to get a better price on a car, they offer services where it’s a predetermined price that you get. So they’ve kind of done a little bit of work for you, that you’re going to get on a little bit of a better price than you might if you just walked in and bought the car and didn’t haggle at all.
And so they’re all a little different. Costco’s program is kind of run through Costco and they generally will connect you with one dealer in your area based, on the kind of car you want. And then you can work with the dealer from there. Sam’s Club actually works through TrueCar, and TrueCar is kind of its own service. You may have seen it through other companies that contract with TrueCar; you may be able to use it separately. But what TrueCar does is they’ll send you kind of multiple dealers in your area who may have the type of car you want, and you can kind of go through those options.
And then, BJ’s does something sort of similar, you can go on to their website and look up the kind of car you want and then see kind of these different dealers in your area who offer this car, and then you can have the dealer contact you if you’re interested in the car. So they all operate a little differently but, yeah?
Steve Pomeranz: They’re offering a fixed price for the car, is that what you’re seeing here as opposed to going into the dealership and starting to haggle? They’re going to say, do you want to buy the x and x car and the cost is this. Is that it?
Lisa Gerstner: Yeah, so typically it’ll start that way. They’ll say, here’s what we can offer you. But we’ve found that they’ll even haggle a bit further often. You’re not necessarily limited to what the program dictates. So maybe they start with one price, and if you are interested in haggling a little more, so even if you are someone who likes to do that, it may be a good place to start.
Steve Pomeranz: Okay, well, that’s very cool. What about credit cards? I know that, of course, these clubs have their own credit cards which give you access to buying their stuff, but what do they do in the credit card area?
Lisa Gerstner: Yeah, so all of them offer credit cards, and I think they’re all attractive in their own right but, depending on which club you join. Sam’s Club is attractive especially, because of the gas rebate; so they offer 5% cash back on up to $6,000 spent yearly on gas, which is, that’s a good rebate, 5%.
Steve Pomeranz: Right, that is.
Lisa Gerstner: 3% on dining and travel and then 1% on everything else. So it’s really kind of a good all-around package on that one. Costco’s also similarly kind of a good all-around. You get 4% back on up to $7,000 you spend a year on gas. They’re not quite as high but still pretty good. 3% on dining and travel, and then you also get 2% on Costco purchases, so that’s nice because they offer you a little bit of a boost on in-store purchases.
Steve Pomeranz: Okay.
Lisa Gerstner: And then the 1% on everything. And then, BJ’s I think is attractive because if you really want an in-store good rebate, that’s where you want to look because they give either 5% or 3% on BJ’s purchases, depending on your membership level. And then, 2% on restaurants and gas stations, and 1% everything else, so-
Steve Pomeranz: So you’re getting-
Lisa Gerstner: Pretty good all-around spending.
Steve Pomeranz: Yeah, you’re getting the membership club discounted price, but in addition to that, if you have the card you’re getting another 3% or so.
Lisa Gerstner: Right, so good in-store rebate on that one.
Steve Pomeranz: What about gasoline? I mean, these stores are very popular, especially Costco for getting gasoline. Can you get a discount on those, too?
Lisa Gerstner: Yeah, so typically with these cards, sometimes with other general credit cards, you can’t always get a rebate at warehouse club gas stations. But if you’re using the club’s own card, you usually can. So that’s nice if you can go to the Costco or the Sam’s Club station, use the corresponding credit card there and get a rebate. BJ’s does that too, they do a 10%. I’m sorry, a ten cent per gallon discount at BJ’s stations with their credit card, yeah.
Steve Pomeranz: That’s good.
Lisa Gerstner: Yeah, pretty good deal.
Steve Pomeranz: I’m talking to Lisa Gerstner, she’s with Kiplinger. And we’re talking about these big discount clubs to see what other kinds of savings they may have on other items, especially kind of financial services items.
One item that you picked that kind of surprised me was identity theft protection. Everybody’s really getting aware of that especially with the recent Experian scandal. Tell us about those.
Lisa Gerstner: Yeah, that’s certainly become relevant. Has been for a long time really, but, yeah, Costco and Sam’s Club both have some offerings there. Costco works through a program called Complete ID which is affiliated with the credit agency Experian. And it’s a pretty good deal; it’s $9 for an executive membership person or $14 a month for gold star members. And so it’s a nice package, you get monitoring of your credit reports from all three credit agencies which is helpful. They’ll look at all the agencies for any suspicious activity on your credit reports, new accounts opened that might not have been yours. They’ll alert you of that, which is nice. They’ll look at black market Internet sites to look for any stolen personal information that may be out there on you like your social security number, criminal record monitoring in case someone is arrested in your name, stuff like that.
So it’s a pretty good deal. And then, Sam’s Club also does a partnership with LifeLock, so you can get 20% or 25% off based on your membership level. And LifeLock has a little bit more variation, and they have I think at least three different packages you can choose from. And you’ll get a discount on any package you pick with them, and they have many similar offerings depending on which package it is.
Steve Pomeranz: Fascinating, all right, let’s move on to insurance. Can you get a better deal with insurance?
Lisa Gerstner: Yeah, so Costco has the widest range of options.
They do dental, auto, homeowners, life insurance, all of those fall under their umbrella. You can get discounted auto and home insurance through Ameriprise with them, depending on your membership level. If you’re an executive member, you might be able to get some extra perks too, like roadside assistance with your auto insurance.
Life insurance comes through protective life insurance and you get preferred rates. They do have a health insurance marketplace, but they’re focusing more on their kind of business group insurance. So, if you’re a small business owner, you might want to look into that for them. So lots of options with Costco, and then BJ’s does do a discount through Geico on auto premiums. And depending on which club you join, you may also be able to get a homeowner’s discount along with that auto insurance discount, but I think it varies by club with that one.
Steve Pomeranz: One of the other services mentioned was tax preparation, but I don’t think you guys came out with a recommendation there.
Lisa Gerstner: Yeah, so they have a partnership at Sam’s Club with 1-800 Accountant, which is kind of a virtual tax service, and you can get discounted income tax prep for members with Sam’s Club. And what we found is a couple reasons you might want to go with a local accountant for that.
One is that if you have a really simple return, on average, you’ll still pay a little more through 1-800 Accountant, through the Sam’s Club, even with the discount just based on average figures. You might as well get someone local if you’re going to pay more if you go through 1-800 Accountant.
Now, you might save money if you have a more complex return. If you have itemized deductions and extra schedules and all these things to deal with, the price may be better through 1-800 Accountant. But if you’re getting to that level where it’s a really complex return, you might be better off just finding someone local, finding a good match, talking to people face-to-face where you can go in. So we think maybe take a pass on that one. There’s probably better options in your own town.
Steve Pomeranz: We’re running out of time, so let’s move quickly to mortgage lending. I think the big thing with mortgage lending on your report was that there’s a cap on fees, which is attractive.
But then again, you’ve got to kind of watch because these fees are fungible. There can be a cap in one place and they can put it in another place as well.
Lisa Gerstner: That’s exactly right, so Costco does offer kind of mortgage shopping. You can go in and see what rates you can get from partner lenders through Costco. Definitely worth a look, but like you said, the fee cap is attractive but you have to make sure you’re not paying more by the interest rate or some other option. So just shop around, look at local lenders, look through other sites like Bankrate or LendingTree, and just make sure you’re getting the best deal you can.
Steve Pomeranz: All right, so what does it cost to join these wholesale clubs? BJ’s what does that cost?
Lisa Gerstner: Mm-hm, BJ’s, it’s $50 or $100 depending on the membership level that you want. Costco is $60 or $120, and these are the regular memberships, there’s also business, too. And then Sam’s Club is $45 or $100.
Steve Pomeranz: To get this kind of information, Kiplinger is a great source for all of you. So, I highly recommend picking up or going online and subscribing to Kiplinger’s. And to hear this interview again, don’t forget to come to our website at stevepomeranz.com. You’ll get a summary of the vital lessons learned here today. And while you’re there, don’t forget to sign up for our weekly update where we’ll send you important lessons from the show straight to your inbox. Lisa Gerstner, thank you so much for joining us.
Lisa Gerstner: Thanks for having me.