Sorry Starbucks, I Love You But I’m Not Going To Sign Up For Your Credit Card

In February 2018, Starbucks and Chase launched the Starbucks Rewards™ Visa® Card. This credit card links directly to your Starbucks Rewards account and lets your earn stars for your purchases.

Starbucks Visa

Starbucks keeps emailing me offers to get this card. I’m sure if you’re a Starbucks Rewards member, you’ve also received these messages more than a few times. If you are a regular visitor to Starbucks, it may seem to make perfect sense to get this card. You drink their coffee anyway, why not earn free drinks for your everyday spending, right?

I’m a self-admitted Starbucks-a-holic. Every morning shift I work, I’ll stop by for an Iced Coffee with Sugar Free Vanilla Syrup (no classic) and 2% milk. I was quite proud when the baristas at my regular store would make my coffee for me without having to order. They even wished me good bye on my last visit when I was transferred to a new work location and wouldn’t be a regular at their store anymore. It was an appropriate farewell, a note on my coffee and a Starbucks gift card. 🙂

So I’m the target audience for the Starbucks Rewards Visa card then, right? The problem is that before I’m going to apply for any card, I’m going to do the math and see exactly what it offers. 

Starbucks Rewards Visa Card

Annual Fee – The Starbucks Rewards Visa has a $49 annual fee that is NOT waived for the first year.

Earn 250 Stars Instantly – You’ll get a bonus right away with this card as you’ll earn 250 Bonus Stars the first time you use your Starbucks Rewards Visa Card to digitally load your registered Starbucks Card in your App.

Sign Up Benefits – The current sign up bonus for this card is 2,500 stars after spending $500 on purchases in the the first three months from account opening.

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Starbucks junkies know that you can redeem 125 stars for a free item. That means the sign up bonus is worth 20 free food or drink rewards. Wow, that’s a whole lot of free coffee. But what’s 2,500 stars worth in dollars? I like to save my rewards until I need to buy lunch at Starbucks, as the sandwiches or protein boxes can run $7 – $10 each. Say you max this out and get $10 in value for each reward. That’s only $200 of value for the sign up bonus (sad trombone). Not as impressive when you think of it like that, since you have to pay $49 to get the card in the first place.

Spending Categories – On the sign up page, you’re told that you can receive up to three stars per dollar for purchases in Starbucks stores, Here’s the actual earning rate:

Earn 1 Star for every $1 you digitally load to your registered Starbucks Card on your App with your Starbucks Rewards™ Visa® Card in addition to the 2 Stars per $1 you already get when you pay with your registered Starbucks card or your registered Starbucks Card on your App as a Starbucks Rewards™ Member. That’s a total of 3 Stars for every $1 you spend at Starbucks® stores.

As a reminder, EVERYONE gets two stars per dollar for Starbucks purchases in the Starbucks Rewards program. This card gives you 1 extra star for every dollar loaded to your Starbucks account (via the app) from the Starbucks Visa. So you are getting one extra star per dollar. Remember it takes 125 stars for a free item that may cost $10 (at best). If my math is right, that means each star is worth $0.08 each. So reloading your Starbucks card with the Starbucks Visa can earn up to 8% back.

What about other purchases?

Every qualifying purchase brings you closer to food or drink Rewards with 1 Star for every $4 you spend outside of Starbucks® stores.

Using the same formula as above, that means you’ll earn a maximum of 2 cents back on every dollar (because 0.25 stars per dollar spent times 0.08 cents per star). Now, a 2% return on a rewards card isn’t bad but here’s the problem with that math…

In order to get that return, you have to getting $10 worth of value EVERY TIME you redeem 125 stars for an item at Starbucks. If you use it for a $7 breakfast sandwich, your rewards just lost 30% in value. See the problem here? Maybe there’s other value to be had with the card.

Barista Picks – This is a benefit specific to the Starbucks Visa card and there’s no way to tell how valuable it is.

Explore our favorite food and drink items with a variety of free Barista Picks curated just for cardmembers. They’ll be delivered to your email and App 8 times a year for you to redeem at participating Starbucks® stores.

Eight times per year, Starbucks will add a free item for you redeem in your account. However, there’s no way to see what the value of this may be. Will they give you a cookie or a Frappuccino? Even if you say this item will average $6 in value, that means you’re breaking even on the $49 annual fee the card charges.

Foreign Transaction Fee – The Starbucks Rewards Visa charges a 3% fee for foreign purchases so it’s best to leave this card at home when traveling overseas.

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Other Benefits – You’ll also get other Visa benefits when making charges with the Starbucks Rewards Visa card. Here are a list from the card’s website:

Auto Rental Collision Damage Waiver

Decline the rental company’s collision insurance and charge the entire rental cost to your card. Coverage is provided for theft and collision damage for most cars in the U.S. and abroad. In the U.S., coverage is secondary to your personal insurance.

Extended Warranty Protection

Extends the time period of the U.S. manufacturer’s warranty by an additional year, on eligible warranties of three years or less.

Price Protection

If a card purchase you made in the U.S. is advertised for less in print or online within 90 days, you can be reimbursed the difference up to $500 per item, $2,500 per year.

Purchase Protection

Covers your new purchases for 120 days against damage or theft up to $500 per claim and $50,000 per account.

Trip Cancellation / Interruption Insurance

You can be reimbursed up to $1,500 per trip for your pre-paid, non-refundable passenger fares, if your trip is cancelled or cut short by covered situations like sickness or injury

 

Final Thoughts

So what does this all mean? I’d say that you’d be lucky to get 2% back on the money you spend on this card. You get eight free items throughout the year but you have no idea what they are. You can get a sign up bonus worth $200 but have to pay the $49 annual fee even for the first year.

In comparison, you can sign up for the Sapphire Preferred card and get 50,000 Ultimate Rewards points after spending $4000 in the first three months from account opening. Those points are worth at least $500 and the annual fee is waived for the first year. This card also earns 2 Ultimate Rewards points for spending on restaurants (which INCLUDES STARBUCKS STORES AND AUTO RELOADS)!!!!! You’ll earn two stars per dollar plus two Ultimate Rewards points. I think that’s worth more than three stars with the Starbucks card.

If that would be too much of a stretch to spend $4000 in three months, you can still sign up for a card that will earn you 2% back on all purchases without having to pay an annual fee. The Citi Double Cash card earns 2% back on all purchases and is currently offering $100 back after spending the same $500 in three months.

While the approximate 2% return on all purchases and extra for Starbucks purchases makes this card a decent value, I can’t recommend it. If you’re reading this webpage and have gotten this far down my article, you’re not in this game to get 2% cash or a free coffee (or twenty). You want to be able to travel better using your miles and points. Don’t waste a credit card sign up on this card and sign up for cards that will get you closer to your travel goals instead.

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