Americans credit card debt has just hit a disturbing record of $1.02 trillion according to the federal reserve.
Coffee drinkers now have a new way to get their caffeine buzz.
Starbucks is launching a co-branded Visa credit card Thursday that enables cardholders to rack up points, called Stars, redeemable for drinks and food at more than 8,000 participating Starbucks. Customers may earn points on purchases at Starbucks and anywhere Visa is accepted.
The Starbucks Rewards Visa Card is named for the company’s loyalty program, and cardholders automatically become members who get exclusive perks, according to the company.
The credit card through Chase has a $49 annual fee.
Stars accrued via the credit card expire the same way those earned the traditional way do — on the first day of the month after a full six months.
The extras cardholders receive include:
- 2,500 Stars once you spend $500 in the first 3 months.
- One Star for every $4 spent somewhere other than Starbucks.
- Automatic Gold Status in the Starbucks Rewards program.
- Eight free foods or beverages per year.
“It’s important to us to make earning rewards as easy for our customers as possible, and the Starbucks Rewards Visa Card is a powerful tool for us to do that because of how easily it fits into their daily lives,” said Matt Ryan, Starbucks chief strategy officer.
Once an application is approved, a customer will receive a digital card loaded into the Starbucks mobile app, the Seattle-based coffee chain explained. The physical card arrives seven to 10 days later.
Many companies with co-branded credit cards earn money for each new credit card issued and from the financial penalties paid by cardholders who don’t pay their bills on time, according to Bill Hardekopf, CEO of the credit-card comparison website LowCards.com.
Starbucks declined to comment on its arrangements with Chase.
Hardekopf added that having the Starbucks name and logo emblazoned on the front of the credit card is a form of free advertising.
“Every time you whip it out of your purse or your wallet, it reminds you of Starbucks,” he said. “That helps with their branding. A consumer is reminded that ‘Hey, Starbucks is out there. Maybe I should get myself one of those lattes.’ ” he said.
Depending how much a Starbucks Rewards Visa cardholder spends, her or she could wind up getting free food or a free drink almost every week the first year, according to Jennifer Roberts, head of digital products at Chase.
That’s why Nathan Hamilton, credit card director at the financial services firm Motley Fool, sees the credit card less as a marketing tool for Starbucks than as a way to increase its biggest fans’ spending.
“It’s a way to get routine, frequent Starbucks users to buy more,” he said. “That’s where companies make their money, by going deep with their most loyal customers.”
An estimated 174 million Americans have a credit card, and 141 million of them carry a balance on at least one, according to credit reporting agency TransUnion’s most recent data. The average balance on a card is $5,483.
A Starbucks Rewards prepaid Visa card is scheduled to launch later this year, Chase’s Roberts said.
Chase is JPMorgan Chase & Co.’s U.S. consumer and commercial banking business.
With new Pink Medley Tea Latte.
Follow USA TODAY reporter Zlati Meyer on Twitter: @ZlatiMeyer
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