…And buying anything else would be even worse.
I get it, nearly everyone goes to Starbucks. Even though I think the coffee isn’t great, it’s still convenient and someplace I’ll stop when I can’t get to my favorite neighborhood spot. So it seems reasonable to create a Starbucks credit card to pair with its popular mobile app.
Unfortunately, that new Starbucks Rewards Visa card — released in partnership with Chase — has some of the least impressive perks I’ve seen in a rewards credit card at its own retail partner. You would probably be better off using anything else in your wallet.
Basic Rewards Structure
The new credit card has a pretty simple benefits program:
- 1 star for each dollar you load on your Starbucks card in the mobile app
- 1 stars for each 4 dollars you spend at other stores
- Automatic Starbucks gold status (which includes free refills at the lower, Green tier)
- 8 “curated” barista picks each year, selected by Starbucks
- There is a $49 annual fee, as well as foreign transaction fees on international purchases.
- For now, a sign-up bonus of 2,500 stars when you spend $500 anywhere in the first three months (redeemable for 20 free items)
Some people have also promoted the fact that you still get 2 stars per dollar when you purchase Starbucks food and beverages with the mobile app, suggesting the total is 3 stars per dollar at Starbucks. In fact, this is boneheaded math and should not be included as a perk of the credit card.
Anyone can get those 2 stars with any credit card, or even when paying cash. Once the app is reloaded, the credit card used doesn’t matter, and you can continue to earn 2 stars per dollar like any other Starbucks Rewards member.
So when loading the card I should only look at the rewards for that step. If I use my Sapphire Reserve credit card I can get 3 Ultimate Rewards points per dollar. (Many other credit cards also have dining bonuses.) Those are worth at least 1.5 cents each for a total value of 4.5% when I pay at Starbucks — much more valuable than 1 Starbucks star.
Even Worse Value Everywhere Else
How much are these stars actually worth? It takes 125 stars to get a free drink at Starbucks, and while I usually stick to drip coffee I will be generous and assume you usually spend $4.50 on a latte. That means each star is worth about 3.6 cents. (You can also use your stars for any food item in the store, some of which are more expensive.)
If you’re using this card at other stores, you’re getting 1 star per four dollars at 3.6 cents each, for about 0.9% in rewards. It’s practically as good as cash if you go to Starbucks often, since you’ll have no trouble finding an opportunity to use your stars. But it’s incredibly easy to find 1% cash back cards. The Chase Freedom card is one example, with no annual fee. The Chase Freedom Unlimited card is even better, with 1.5% cash back and no annual fee. (These cards have other slight differences bewteen them.)
So there’s no good reason to use this card at other retailers, and even at Starbucks, I wouldn’t use this card to buy coffee with dollars. The measly 1 star per dollar for reloading the app simply isn’t worthwhile when so many better options exist with their own dining bonuses.