About Starbucks Rewards Visa Card
The Starbucks Rewards Visa is a newly released credit card from the coffee giant that offers 2,500 rewards points as a sign-up bonus and extra rewards when you use the card to add money to your reloadable Starbucks card.
When the news hit that the Seattle-based coffee company launched its own credit card, it was a landmark moment. We’ve done reviews of more than 100 credit cards and not once have we ever seen a card from a coffee shop.
Even though the card is unprecedented, its basic structure of rewards, benefits and rates and fees are all part of the normal way that rewards credit cards work. It’s just that, instead of getting points you can redeem for travel or cash, you get points you can redeem for coffee.
Is this card a great fit for Starbucks loyalists? What are its strengths and weaknesses? Are the rewards you get worth the annual fee you pay?
We will answer each one of those questions over the course of this review as we explain the card’s rewards, benefits and its rates and fees.
Every credit card that offers rewards works through a system where you get a certain amount of points or miles for nearly every purchase you make.
In most cases, you’ll also get a chunk of bonus points if you can spend a certain amount of money in the first three months of owning the card. This is what is known as a sign-up bonus.
The Starbucks credit card has both of these rewards opportunities.
Earning Stars on Purchases
The coffee company’s points are known as stars and its loyalty program is known as Starbucks Rewards. Whenever you earn stars, they’re deposited to your Rewards account.
Previous to the credit card, you could earn those stars two ways. First, you earned two stars for every dollar you spent on your Starbucks reloadable card. Second, you could earn stars from bonus coupons fixed to bags of Starbucks coffee at grocery and warehouse stores.
The new credit card allows you to earn additional points. For every dollar that you deposit to your Starbucks reloadable card from your Starbucks Rewards Visa, you get one star in addition to the two stars you already get for every dollar spent from your reloadable card.
You also get stars when you use your credit card to make everyday purchases wherever you go. However, the rewards rate on these types of purchases is far less lucrative: 0.25 stars for every dollar you spend instead of one to two points per dollar like most rewards cards.
Earning Stars from One-Time Bonuses
In addition to earning stars on purchases, you can get 250 stars the first time you use your Visa card to load your Starbucks card.
You can also earn 2,500 stars when you spend $500 in the first three months of owning your card.
How Many Stars Can You Earn in One Year and How Much Are They Worth?
Knowing how many points you can earn in a year with a rewards credit card is one of the most important questions you can ask. The card may not be worth it to you if the yearly rewards are uninspiring.
To calculate the rewards you could earn with the Starbucks Visa, we first have to know how much people spend at what is arguably the most well-known coffee chain in the country.
There aren’t many reports out there on how much we spend at Starbucks. We did find some general coffee data from investment site Acorns, though. The site’s 2017 Money Matters Report said that the average American spends about $1,100 a year on coffee.
For the purpose of calculating rewards, we’ll assume that the average Starbucks customer spends that much each year with their Starbucks card, which results in 3,300 stars.
Using your Starbucks Rewards Visa to make all your other purchases (around $25K) will get you another 625 stars. Also, don’t forget the 2,750 stars you get from one-time bonuses.
The grand total for the first year? Around 6,750 stars. Those stars can only be redeemed for free food and drink bonuses, which are 125 stars a piece and are automatically sent to your Rewards account. So, those 6,750 stars are worth 54 freebies.
How much are 54 free drinks or food items? Based on our research of a 2017 study on the average cost of a Starbucks coffee ($2.75) and bumping that up to $3.50 because you’ll probably go for a pricier-than-average drink since it’s free, we think the cash value of your first-year stars is $183.
To be honest, that’s a fantastic rewards rate for 6,750 rewards points. With most credit cards, 6,750 rewards points would be worth $67.50. Granted, you can spend that $67.50 where you’d like, but the value is about a third of what the Starbucks Rewards Visa offers.
Here’s the catch, though. These numbers are based on someone who spends at least $20 a week at Starbucks and includes the 2,750 in one-time bonuses.
And, remember, the 3:1 rate is only available when you add money to your Starbucks card form your Starbucks Visa, not on purchases you make at Starbucks with your Visa.
Pro tip: Stars expire six months after the year in which they were earned.
There are three main benefits you get for owning the Starbucks Rewards Visa Card: Gold status, eight free items throughout the year and participation in a Visa benefits program.
Complimentary Gold Status
The Starbucks Rewards program has two tiers: Gold and non-Gold. Gold status gives you the ability to earn and redeem stars for free food and drink.
You also get access to monthly double-star days, where all your Starbucks card purchases earn double the points they normally would.
The final perk is that you get a personalized gold card, which is an upgrade from the typical Starbucks reloadable cards.
Eight Free Items Per Year
Starbucks Rewards Visa cardholders get eight Barista Picks every year, which are free drinks or food items curated just for cardmembers, Starbucks’ website says.
At the time of publishing, Starbucks didn’t say what these Barista Picks would be. We’re guessing they most likely will be featured seasonal drinks or new items Starbucks adds to the menu.
The fine print says these free items will automatically go into your rewards account and will expire 30 days after they appear.
Visa Benefits Program
Your credit card comes with a series of travel- and shopping-related coverages and protections that many consumers don’t know exist.
Each of the benefits we’re about to list have certain restrictions and limits, all of which you can read about in the benefits guide you get with your credit card:
- Complimentary rental car insurance
- Extra year of warranty on products with warranties 3 years and less
- Price protection if an item you bought goes down in price within 90 days
There are several other benefits you get with this program, all of which are included in the paperwork you get when your card arrives.
The Starbucks Rewards Visa’s Rate and Fees
Here is a quick list of the card’s rates and fees:
- APR: 17.24%-24.24%
- Cash advances: 26.24% APR, 5% fee
- Balance transfer fee: 5%
- Foreign transaction fee: 3%
- Late fee: Up to $37
- Annual fee: $49
While the slew of benefits and rewards you get with this card are excellent for Starbucks loyalists, the rates and fees are unusually high. The main reason behind the high rates is that the Starbucks Visa is, basically, a store credit card and store credit cards tend to have higher APRs.
Also, notice that this card has a $49 annual fee that will be charged to your account the first month you own the card.
Our Final Thoughts on the Starbucks Rewards Visa: Pros and Cons
This new credit card from Starbucks has one clear strength: free drinks and food. If you use the credit card to add $20 to your reloadable card every week then you’ll earn enough stars to get a free food or drink item about once every two weeks.
The big difference is that you have to put money on a Starbucks card in order to get three stars for every dollar and the resulting rewards you get have to be redeemed for food and drink.
Based on our research, we believe this card has some serious drawbacks that might, depending on the consumer, negate its rewards value.
First, the card’s rates and fees are high across the board. Avoid carrying a balance on this card or paying late, as the resulting payments will really start to add up.
Also, the card’s $49 annual fee cuts into its rewards value, although not enough to make it a poor choice for those who stop by Starbucks a couple of times a week.
However, if you only use your Starbucks card a few times a month or less than that, the card really has no value for you.
Second, the card’s rewards rates for non-Starbucks purchases is awful.
With all this in mind, we think the most effective way to use the Starbucks Rewards Visa is to load your Starbucks card with it.
Don’t use the card for anything else because the redemption rate for non-Starbucks purchases is not worth your time.
Assuming you spend around $25,000 on non-Starbucks purchases, you could earn $500 in cash rewards with the Citi Double Cash instead of the $15 in free drinks you’d get if you used your Starbucks Rewards Visa for the same purchases.