Is Costco Really the Cheapest Way to Rent a Car?

Costco has quietly become one of the most popular places for U.S. travelers to book rental cars. Its built-in discounts, free extra driver and flexible terms have earned a loyal following among frequent travelers who swear it is always the cheapest option. Yet in the last couple of years, car rental prices have shifted significantly, and more travelers are finding that Costco is not always the low-price winner.

So is Costco really the cheapest way to rent a car, or simply one of several strong tools in your search? The answer is more nuanced than the marketing slogans suggest. For a full overview of how the Costco rental car program works, including eligibility, booking mechanics and included benefits, see our Costco Rental Car Program explained guide.

How Costco Travel Car Rentals Work

Costco does not operate its own rental fleet. Instead, Costco Travel acts as a consolidator, negotiating discounted rates with a small group of major brands and packaging those rates in an easy-to-compare search tool called the Low Price Finder. Today, Costco Travel partners with Alamo, Avis, Budget and Enterprise in the United States and Canada, with similar offerings in select international markets.

To access these deals, you must be a Costco member and use your membership number when you search. The reservation, however, is ultimately made with the rental company itself. Travelers pay at the counter, not to Costco, and can usually earn points or credit with the rental agency’s loyalty program on top of the Costco discount. This structure differentiates Costco from traditional online travel agencies that operate more like middlemen.

One important rule is that the primary driver must be a Costco member and should be prepared to show a valid membership card at pickup for the discount to apply. If the name on the reservation, the driver’s license and the membership do not match, the rental counter can legally strip out the Costco rate and reprice the booking at standard levels. That makes it difficult, for example, for a parent to use their membership to book a car in an adult child’s name who is not on the membership account.

Costco’s website does not support every type of rental. Neighborhood-to-neighborhood one-way rentals and certain specialty bookings require a phone call, and one-way rentals generally bake higher drop fees into the base rate. Still, for the vast majority of leisure rentals that start and end at the same location, Costco offers a streamlined way to view multiple brands at once.

Where Costco Really Shines on Price

When travel writers and consumer sites have compared Costco’s car rental prices to booking directly with the same agencies or through competing portals, Costco frequently comes out ahead. In a recent test of short airport rentals in several large U.S. cities, Consumer Reports reporting reprinted by Yahoo found that Costco beat the published rates of its partner agencies in most scenarios.

In those tests, the only major brand that occasionally undercut Costco was Avis when a prepaid “pay now” option was selected. Even then, Costco’s fully flexible prices were close to Avis’s nonrefundable rates.

Other independent comparisons, such as an analysis by auto site Motor & Wheels, have reached similar conclusions. In sample trips that included a week in Maui, a long one-way drive in California and a weekend in Montreal, Costco produced the lowest or near-lowest prices against competitors like Hotwire and a major credit card travel portal. In some cases, Costco’s rate advantage was substantial, especially on longer rentals where base rates and taxes compound over several days.

The picture that emerges from these studies is that Costco often leads the pack on standard, flexible rentals with well-known brands, particularly at major airports and on weeklong or multi-day trips. Travelers regularly report savings ranging from tens to several hundred dollars compared with what they could find by booking directly or through major booking engines. For families and leisure travelers who want mainstream brands without prepaying, Costco consistently delivers strong value.

However, even in these favorable comparisons, it is crucial to emphasize that “often” is not the same as “always.” The same research that highlights Costco’s strengths also shows that individual rental agencies or other channels occasionally post promotional rates that beat Costco’s offers on specific dates or vehicle classes. Treat Costco as a benchmark rather than an automatic lowest-price guarantee.

The Hidden Value of Free Extras and Flexible Terms

Pure headline price is only one piece of the rental car puzzle. Costco also adds value through bundled perks that do not always show up in a simple price comparison chart, but can significantly affect your total cost. The most important of these benefits is the waived fee for one additional driver on most rentals.

Costco members who book with Alamo, Avis, Budget or Enterprise typically receive one free additional driver at participating locations in the United States and Canada, and in some cases in Europe as well. Standard additional driver fees with these companies often run around 10 to 15 dollars per day. On a weeklong rental, that means Costco could save you roughly 70 to 100 dollars solely on this perk if you plan to share driving duties with a spouse, partner, friend or relative.

Other organizations such as AAA and AARP also offer free additional driver benefits with certain brands, but Costco’s benefit is broad and simple. You do not need to be a spouse or domestic partner to qualify as the free extra driver, as long as the person meets rental requirements and appears at the counter. If a competitor advertises a slightly cheaper base rate but charges separate additional driver fees, Costco’s total out-of-pocket cost may still be lower once you factor in that extra fee.

Costco also emphasizes flexibility. Most rentals booked through Costco Travel require no prepayment and carry no cancellation penalties if you cancel before pickup through your online account or the call center. That means you can book early to lock in a good rate, then recheck prices closer to your trip and rebook if they drop. For Executive members, an annual 2 percent reward on Costco Travel purchases provides an additional rebate that makes the effective cost a bit lower.

When Costco May Not Be the Cheapest Option

The landscape has changed since the early days when Costco was almost always a clear-cut winner. After the pandemic disruptions to rental fleets and pricing, many travelers have reported that Costco’s advantage has narrowed or even disappeared on certain trips. Online travel forums now contain frequent accounts of travelers finding cheaper options on other platforms for specific destinations or dates.

One telling example from mid-2024 shows a traveler pricing a weeklong rental in the U.S. Midwest. Costco’s best price for a compact car came in around 900 dollars, while a major online travel agency and a direct booking with a national brand offered comparable or better vehicles for under half that, once taxes and fees were included. That is just a single data point, but it illustrates that Costco’s contracted rates are still subject to the broader dynamics of supply, demand and corporate promotions.

Costco also works with a limited set of brands. If Hertz, National, Dollar, Thrifty, Sixt or regional competitors run a deeply discounted sale, those prices may never appear in a Costco search. For loyalists of certain brands, or for travelers targeting locations where Costco’s partner agencies are not strong, other booking channels may provide superior deals.

Prepaid rates are another area where Costco can lose on headline price. Many agencies and online travel sites now offer two tiers of pricing: a lower nonrefundable “pay now” option and a higher flexible “pay later” rate. Because Costco bookings are almost always pay-at-counter, they more closely match flexible rates. If you are comfortable locking in nonrefundable travel to save money, a prepaid rate on a competitor site can sometimes beat Costco even after accounting for perks.

Comparing Costco to Other Discount Channels

To understand whether Costco is the cheapest option for your particular trip, it helps to view it as one competitor in a crowded ecosystem of discount channels. AAA and AARP member discounts, corporate or university codes, airline and credit card portals, opaque booking sites, and aggregator tools all compete to deliver low rates in slightly different ways.

Membership-based programs like AAA and AARP can mirror some of Costco’s benefits. AAA members, for example, may get a free spouse or domestic partner as an additional driver with brands like Hertz and Avis, while AARP often extends similar perks with Avis and Budget. If you already hold one of these memberships, their promo codes are worth testing head-to-head against Costco’s offers.

Then there are specialized tools that track coupons and corporate codes and automatically rebook you when prices drop. These services often incorporate Costco as one of many sources but also scan for public promotional codes, unique rate plans and occasional unusually low “loss leader” offers that may not be visible on Costco’s Low Price Finder. Travelers in online communities frequently report that such tools either find a slightly lower non-Costco rate or confirm that Costco’s rate truly is the best available.

Finally, direct booking with a rental agency’s own website can sometimes unlock targeted promotions, status-based discounts or free upgrades that a third-party channel cannot access. For instance, certain elite members in rental loyalty programs receive periodic discount offers or bonus-day coupons that only apply on direct bookings. In those cases, a loyalty-based discount might beat Costco’s contracted base rate, even before you add the potential value of bonus points or future free days.

How to Evaluate Total Cost, Not Just Sticker Price

When you compare Costco to other rental options, focusing solely on the daily base rate is a common mistake. True cost takes into account at least four elements: rate, fees, flexibility and benefits. Costco performs well in three of the four categories, but the exact mix matters for your situation.

Start with the quoted total price including taxes and mandatory fees for the same car class, dates and pickup location. Use identical pickup and drop-off times across sites, since small changes in hours can shift a rental from a daily to weekly pricing structure. Then, confirm whether each quote is refundable or prepaid, and note any cancellation penalties and deadlines. Costco generally offers fully flexible rates with no Costco-imposed cancellation fee before pickup, a feature that carries real value if plans are uncertain.

Next, layer in the cost of additional drivers. If you and a traveling companion plan to share driving responsibilities, check whether your chosen channel offers a free additional driver and under what conditions. Costco’s free extra driver can easily erase a modest difference in base price versus a competitor that charges 10 to 15 dollars per day for the privilege. Similarly, if you qualify for free additional drivers through another organization or state law, the incremental value of Costco’s perk is smaller.

Insurance coverage is another subtle factor. Costco Travel itself does not bundle rental car insurance, but many Costco members casually rely on a particular credit card that offers coverage as long as the car is booked directly or through most third parties. Always read the current terms of your card and rental agency to ensure that booking through Costco does not affect that coverage. In most cases, using Costco should not disrupt credit card insurance, but if a specific card requires booking through its own travel portal, that requirement may tilt the decision away from Costco for those who prioritize primary coverage.

Strategies for Getting the Best Deal Using Costco

If you decide to include Costco in your rental search, the key is to use it as both an early booking tool and a benchmark. Because Costco does not require prepayment and charges no cancellation fee before pickup, you can safely book an appealing rate as soon as your travel dates are set. That protects you from major price spikes and gives you a reference point for subsequent searches.

From there, periodically revisit the Costco Travel site to see whether rates have dropped. Rental car pricing is dynamic, and it is not uncommon for Costco’s contracted rates to fall as your pickup date approaches, especially outside peak holidays and special events. If you find a better rate, you can simply book the new reservation and cancel the old one online. Since Costco emphasizes that canceled reservations cannot be reinstated, always confirm the new booking is in place before you delete the original.

At the same time, use a few other channels as cross-checks. Price out the same itinerary directly with at least one rental brand you like, run a search on a major online travel site, and if you belong to AAA or AARP, plug in those discounts as well. You may find that Costco retains a meaningful advantage, or you may discover a targeted promotion that beats it. In either case, you will have confidence that you are not leaving easy savings on the table.

Finally, if you hold Costco Executive membership, remember that your 2 percent annual reward applies to most Costco Travel rentals. It will not show up in the initial quote, but once you account for that rebate, a Costco rate that appears merely competitive may actually come out slightly ahead of rivals at year’s end.

The Takeaway

Costco remains one of the strongest tools available to U.S. travelers seeking affordable rental cars. Its combination of discounted rates from major brands, free additional driver benefits, generous cancellation terms and modest loyalty rebates often translates into real savings, particularly for families and couples who value flexibility and want to avoid prepaid, nonrefundable fares.

Yet the notion that Costco is always the cheapest way to rent a car is outdated. Market conditions since the pandemic, the rise of dynamic pricing and aggressive promotions by individual rental brands mean that Costco now wins most of the time in some scenarios, but not all of the time in every market. On particular routes, at specific times, other membership programs, direct-booking deals, prepaid specials or aggregator tools can undercut Costco’s offers by a meaningful margin.

For travelers, the most practical approach is simple. Treat Costco as your baseline quote rather than your only quote. Book a good Costco rate early to lock in flexibility, then compare it with a small set of alternative sources before you travel. Weigh total cost including extra drivers, cancellation terms and any rewards or rebates, not just the daily base rate. When you do, you will often find that Costco is still the best choice, but you will also be ready to recognize the rare occasions when another path offers a better deal.

FAQ

Q1: Do I have to be a Costco member to rent a car through Costco Travel?
The primary driver must be a Costco member and should be ready to show a valid membership card at pickup for the discount to apply. Non-members can be added as additional drivers if they meet the rental company’s requirements.

Q2: Is Costco always the cheapest way to rent a car?
No. Costco is often very competitive and frequently offers the lowest flexible rate, but not in every case. Sales, prepaid promotions and discounts from other memberships or portals can sometimes produce lower prices for specific dates or locations.

Q3: Which rental car companies does Costco work with?
In the United States and Canada, Costco Travel partners primarily with Alamo, Avis, Budget and Enterprise. Availability and partners can vary by country and airport, but these four brands make up the core portfolio for most Costco searches.

Q4: How much can I save with the free additional driver benefit?
Many major agencies charge roughly 10 to 15 dollars per day for each additional driver. On a weeklong trip, that fee can total around 70 to 100 dollars. If you plan to share driving, Costco’s waived additional driver fee can easily offset a modest difference in base price versus another booking channel.

Q5: Can I cancel a Costco car rental without penalty?
Most car rentals booked through Costco Travel can be canceled without a fee any time before pickup, as long as you cancel through your Costco Travel account or by calling their service center. Some special prepaid rates booked by phone may have different rules, so always review the terms on your confirmation.

Q6: Do I earn rental car loyalty points when I book through Costco?
In most cases, yes. Because Costco transmits the booking directly to the rental agency and payment occurs at the counter, you can usually add your loyalty number and earn points or credits as if you had booked directly. It is wise to confirm this at pickup and check the final receipt.

Q7: Is insurance included when I rent a car through Costco Travel?
No. Costco does not automatically include rental car insurance. Coverage will depend on the rental company’s standard terms, any protection you purchase at the counter, and any insurance offered by your personal auto policy or credit card. Review your existing coverage before declining or accepting extra insurance.

Q8: Are prepaid rates available through Costco Travel?
Most Costco rentals are “pay at the counter” and fully flexible. While some phone-booked specials may require prepayment, Costco generally does not emphasize prepaid, nonrefundable rates. If you prioritize rock-bottom pricing and are comfortable with stricter terms, a prepaid deal on another site might occasionally be cheaper.

Q9: How far in advance should I book a Costco car rental?
It is smart to book as soon as your travel dates are set, since there is usually no cost to reserve early. After booking, check prices periodically. If you see a better Costco rate later, you can book the new reservation and cancel the original one before your trip.

Q10: What is the best way to compare Costco’s price to other options?
Search the same dates, pickup and drop-off times, and car class across several sources, including Costco, at least one major online travel site, and one or two rental companies directly. Compare the total price including taxes and fees, note whether each option is refundable or prepaid, and factor in extras such as additional driver fees and any rewards or rebates tied to your memberships.