Starbucks Is Launching A Credit Card Next Month. Is That A Good Thing?

Co-branded credit cards are nothing new on the market.  Still, it seems like more high-profile brands have been launching credit cards as of late.  Uber released a fairly underwhelming credit card last year.  And now, it appears we’ll have a Starbucks credit card in a few weeks.

While details are still a bit thin, we know that you’ll be able to earn Starbucks stars from purchases both at Starbucks and elsewhere.  The exact ratio of earning and other benefits remain a mystery at this time.

I started wondering whether a Starbucks card would be a good thing, especially compared to other credit cards in the marketplace.  1% cash back cards are a dime a dozen.  The best of the bunch are 2% or slightly higher.  When it comes to travel rewards cards, I’m looking to earn at least 2% in rebates unless there are some other compelling benefits that make it worthwhile to hold the card.

Where does that put a potential Starbucks credit card?  Let’s just say you spend $5 a day at your local Starbucks.  To get that daily cup of joe for free, you’d need to charge $250 on your credit card (assuming a 2% rebate earning in Starbucks stars).

The Final Two Pennies

It’s unfair to declare a credit card DOA before it’s even announced.  But, I have trouble thinking that the card will offer outstanding value.  Even if it did offer a 2% cash-back rebate paid in coffee, there aren’t too many other obvious ways I can think of to add outsize benefit.  Gold members of the Starbucks Rewards program earn a few perks like free refills on drip coffee.  They’re all “nice to haves”, but not game changers.

They don’t need to be.  Coffee is akin to a drug.  Folks that visit Starbucks frequently are likely looking for caffeine. With a Starbucks on virtually every corner, they’re easy to find.  Starbucks doesn’t need to offer a ton of incentive to get someone to visit on a regular basis.  That makes me think this will be a fairly underwhelming card when it’s released.  It might be worth it for the sign-up bonus, but that’s about the most I think we can hope for.

There was one other tidbit I found interesting in the Doctor of Credit article:

• In March, we are launching a significant marketing initiative to sign up customers for special offers outside of Starbucks Rewards, with only 14 million of the 75 million or so unique customers, who visit us each month signed up for Rewards, we have a tremendous opportunity to leverage our new digital technologies to initiate and advance additional direct digital relationships.

It’s interesting to see these numbers, though not surprising.  Roughly 20% of Starbucks customers belong to their loyalty program.  I’m curious what they plan to do to drive more people to join the rewards program.  For as long as Starbucks has been ubiquitous in the US, I imagine it’ll take a pretty big effort to move the needle on loyalty.

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