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Starbucks makes billions of dollars from customers who use gift cards to buy drinks. Find out how the coffee chain functions like a bank.
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With more than 36,000 locations worldwide, Starbucks is undeniably a popular coffee chain. If you order coffee here for an occasional treat or as part of your everyday routine, you may use the Starbucks mobile app to place your orders.
The app is simple to use and saves customers time by allowing them to skip waiting in long lines. But one convenient Starbucks app feature makes the brand a lot of money. Learn more about this feature and discover how to use it to your benefit.
Starbucks regulars can earn double the stars by doing this
The Starbucks Rewards program is a free loyalty program available to all customers. Once you become a member, you can earn Starbucks stars when spending money with the brand. If you pay for your Starbucks order with cash, a debit card, or a credit card, you’ll earn 1 star per $1 on eligible purchases.
However, paying with a Starbucks gift card allows you to earn 2 stars for every $1 on eligible purchases. You can purchase and reload gift cards in the app and enable auto-reload capabilities. While you’ll benefit from doing this by earning double the stars, you should consider that you’re essentially lending Starbucks money for free when using this feature.
Since you’ll pay upfront for future purchases when you reload your Starbucks gift card, Starbucks wins by getting more money upfront before you even order your favorite caffeinated beverages. This feature allows Starbucks to operate like a bank, even though it’s a coffee shop.
During a 2023 Q1 earnings call with investors, former CEO Howard Schultz said the coffee chain saw more than $3.3 billion loaded to gift cards in the United States, which set a new record. With that figure in mind, it’s clear many customers are buying and gifting gift cards.
Earn double stars without parting ways with all your cash
If you’re working hard to meet your personal finance goals, it may be best to fund small amounts of money to your Starbucks gift card when reloading. Through the app, you can refill as little as $10. You can add more anytime if you don’t have enough to cover a purchase.
For most people, it likely doesn’t make sense to reload $100 or more at once. That’s because any money loaded onto a gift card is only usable at Starbucks. You may want to start with $10 or $20 refills and keep the rest of your extra cash in a high-yield savings account to earn interest.
Here’s another suggestion: It may be best to skip enabling auto-reloads so you use up all your funds before the next top-up. The last thing you want to feel stressed about is an unexpectedly low bank account balance due to an auto-reload you forgot about.
Should you avoid using this app feature? Probably not. You’ll earn rewards more quickly by loading money to a gift card instead of paying directly for each purchase using a debit card or credit card. But consider how much money you add to your account before rushing to make a large reload. Starbucks is a corporation that already makes bank every time you order food or drinks.
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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Starbucks. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.
