Starbucks just launched a new credit card in partnership with Chase to help you earn more Star points.
Starbucks Rewards Visa Card
- Annual fee: $49
- Foreign transaction fees: 3%
- Signup bonus: 2,500 Stars after you spend $500 on purchases in the first 3 months from account opening
- Earn 1 Star for every $4 spent outside of Starbucks stores
- Earn up to 3 Stars for every $1 spent at Starbucks
- 8 Barista Picks curated just for cardmembers throughout the year
- Automatic Gold status
- Automatic enrollment in Starbucks Rewards
How much are Stars worth?
You need to have 125 Stars to redeem Stars for a free food or drink item.
- 125 stars per free item (drink or food) = ~$5 value
- $5 value / 125 stars = $0.04 per star (1 star = 4 cents)
$49 Annual fee and 2,500 signup bonus
Assuming the average cost of an item is $5, and you need 125 Stars to earn a free item, the 2,500 Star signup bonus is worth $100.
You'll need to spend $500 within the first three months of account opening to earn the 2,500 signup bonus. Earn an additional 250 bonus Stars the first time you use your Starbucks Rewards credit card to digitally load your registered card in the Starbucks app.
- Spend = 2,500 Stars after $500 = ~$100 in value (20% ROS)
- Action = 250 Stars after first load = $10 in value
- Total = $110 in value / $500 spend (22% ROS)
The Starbucks card has a $49 annual fee, but it doesn't waive foreign transaction fees like other cards that charge an annual fee. It's surprising because most store cards don't have an annual fee.
Earn up to 3 Stars for every $1 spent at Starbucks
You'll notice that the card "earns up to 3 Stars for every $1 spent at Starbucks." 2 Stars are from having Gold status at Starbucks, and 1 Star is from what you would already get from using the card.
- 1 star / $4 spend = outside of Starbucks
- 1 star / $1 spend = at Starbucks (via app balance reload)
Other benefits: 8 Barista Picks + Starbucks Gold Status
The 8 Barista Picks are based on your membership year, and not the calendar year.
It's not clear what the Barista Picks are at the moment.
Starbucks Gold status is relatively easy to obtain without having the Starbucks credit card. Often, Starbucks will give you Gold status when you buy X amount of drinks within a promotional period.
Calculating the break-even point
The effective annual fee for the Starbucks credit card is $21 when you factor in the Barista picks.
- $49 annual fee - $28 Barista picks = $21 EAF
To break-even on the annual fee:
- Other = 1 star / $4 spend = 0.25 star / $1 = 1 cents (1% ROS)
- Starbucks app reload = 1 star / $1 = 4 cents (4% ROS)
Break-even (annual fee)
- x = Starbucks spend
- 0.04x + $28 Barista picks = $49 AF
- x = $525
When you factor in alternative cards you could be using, like a 2% cash back card, the break-even number increases:
Break-even (including opportunity cost)
- 0.04x + $28 picks - 0.02x opportunity cost = $49 AF
- x = $1,050
Does the Starbucks card make sense for you?
You need to spend at least $1,050 per year
$2.88 per day ($1,050 / 365 days) to break-even, otherwise, you lose money on this card.