Double-Dipping at Starbucks

If you go to Starbucks once every two months or more, you should pick up a Starbucks gift card. And register it.

The Starbucks Rewards program is a hybrid between a store loyalty card and a store credit card. Just like a loyalty card, with each transaction, you accumulate points and make your way to earning more benefits. But similar to a store credit card, the benefits only accrue if you use the store card rather than your primary credit card to pay. In Starbucks’ case, however, there’s no need to give out your social security number and wait to get approved. Rather, to accumulate Stars (their version of points), all you have to do is pay for your drinks and food with a Starbucks gift card.

This is how the program works: first, you get yourself a Starbucks gift card. They come in several different styles and may even vary by city – any of them is fine. It can also even be the gift card that you receive when you redeem your credit card points. Then, you create an account in the Starbucks Rewards webpage and register that gift card. From that moment on, you will get one Star each time you make a purchase (no matter what you buy or how bill or small the bill) at Starbucks using that gift card. You can register as many gift cards as you want in your account.

The benefits increase with the number of Stars you get, and will be more or less meaningful to you depending on your drinking and loitering habits. Here are the benefits at each level, straight from the Starbucks Rewards website:

 

Starbucks Rewards Benefit Levels

 

It’s a little annoying that you need to reach 45 Stars to earn your first “free drink every 15 purchases”, but the good thing is that as long as you maintain your Gold status, you’ll keep earning this benefit. That is, provided that you make 30 purchases  at Starbucks every 12 months, you’ll continue getting a free drink every 15 purchases – you don’t have to go 2 rounds of 15 without earning anything again.

To Double-Dip

Now, because Starbucks Rewards requires that you use their gift card to pay for your purchases in order to earn Stars, it may seem like you’re giving up on earning whatever points or cash back you earn through your credit card – but you don’t have to. This is the perfect double-dipping opportunity: a Starbucks gift card can be re-loaded as many times as you want, so why not re-load it using your preferred credit card?

Suppose you go to Starbucks twice a week. Next time, rather than paying for your order on your credit card, you can pick up a Starbucks gift card right on the counter and use your credit card to load it with, say $20. Then use that to pay for your order and all your subsequent orders until the balance runs low again. Then just use your credit card again to re-load it. This way you earn your credit card points (loading a gift card will show up in your credit card statement just like a purchase and earn you the points or cash back accordingly) AND accumulate Stars.

If you have the CitiForward card, for example, this method will earn you 5 ThankYou points whenever you re-load the Starbucks card and a Star each time you actually use it. The Starbucks Rewards webpage even allows you to set up for auto-reload if you so prefer.

If you have a credit card with 5% cash back categories that rotate every quarter, this approach allows you to stretch that benefit even further. For instance, from July to September 2012, the Chase Freedom card is giving 5% cash back on gas station and restaurant purchases. Since Starbucks counts as a restaurant for that credit card, you could load your Starbucks gift card before September 30, 2012, with roughly what you would spend over the following couple of months. Then, even once October kicks in, you can continue paying for your drinks with your Starbucks gift card, essentially earning 5% cash back for drinks bought outside the 5% cash back window!

Also note that your Starbucks gift card can be used in various countries including Canada and the UK – even if purchased and loaded in the US – so no need to worry about foreign transaction fees or navigating local currencies just to get a cup of coffee. And you still get a Star.

Movie Night Tomorrow with Visa and Fandango

If you are a Visa Signature credit card holder, you may want to make tomorrow a movie night. Throughout the summer Visa has been running a Friday 2-for-1 deal with Fandango, whereby its Signature members who buy two or more tickets for the same show through this link get one of them free. This deal is only valid for same-day purchases on Fridays, and tomorrow August 17th is the last day.

Several cards under the Visa brand are Visa Signature cards, including the Chase Sapphire, a United Airlines and an Alaska Airlines card, and even the Capital One Venture card. Just look in your wallet and if you find any card that says “Visa Signature” on it, it should qualify. If you’re still not sure, Visa/Fandango can let you know; before buying your ticket you are required to enter your credit card number and you should get a message saying whether it is a Signature card or not.

2-for-1 Movies from Visa and Fandango

As for the rest of the rules, the main catch is that in order to get the 2-for-1 deal you have to book through Fandango, incurring its convenience fee. However, the 2-for-1 does include the fee as well, so that at least you’ll only pay for half of it. And half a fee is likely cheaper than a whole other ticket. The discount covers up to $19.50 and is only valid once every 30 days, so you can get in on this deal tomorrow only if the last time you took advantage of it was Friday, July 13th or earlier.

If you have a Visa Signature card but are not planning on watching a movie tomorrow or have already used the deal in the last 30 days, you can still get a discount: Signature cardholders get $5 off each purchase of $25 “Fandango Bucks” through the same link. “Fandango Bucks” are essentially Fandango gift cards, which must be redeemed through fandango.com but can be used any day and do not expire. Visa Signature card holders can buy up to $100 worth of Fandango Bucks each month until October 31, 2012. If you frequently buy tickets through Fandango anyway – particularly if you catch movies on weekends when they are first released and may get sold out before you reach the theatre – this can be a nice discount.

If you’re looking for something to do tomorrow, a 2-for-1 deal on movie tickets just might do the trick. But if you’re enjoying the sun and it doesn’t seem like the right day to be indoors, you can still load up on some discounted “Fandango Bucks” and save them for a rainy day.

Secure Your Way into Having a Credit History

I recently met up with a friend of mine who started looking into buying a house, but has no credit history. ‘None at all?’ I asked? She moved to the US only a few years ago, so she never had the benefit of building her credit history as an authorized user for her parent’s credit cards. She doesn’t have US student loans, her utility bills are included in her rent, and her company pays her cell phone bill. She bought a used car and paid for it in cash.

Although it seems like a catch-22, where you need to have a credit history in order to get credit, there may be a few ways out. The most reliable one, which I suggested to her, is getting a secured credit card. Several banks and credit unions offer secured credit cards, which require customers to deposit a certain amount of money as collateral. This deposit, as long as it stays in the bank, generally becomes the credit card holder’s line of credit. Basically, this is a credit card that requires you give the maximum amount you’d like to be able to charge on it – your line of credit – up front. This way, you build your credit history by using it as any other credit card, receiving a statement and paying your balance every month, while the bank has access to your deposit in case you default on it.

Secured Credit Card (from Capital One)

If you decide to close your secured card, say, because you “graduated” into receiving offers and getting approved for an unsecured credit card, you get back the deposit you made for your credit line. There may be some fees, however, for maintaining a secured credit card that end up biting into your deposit, so it’s worth shopping around before settling on the right one.

Below is a sample of a few secured credit card offers out there, with a wide range of minimum deposits and fees.

  • BankAmericard Secured Credit Card ­­– the credit line for this secured credit card offered by Bank of America varies from $300 to $4,900 and is determined by the Bank according to your income and the minimum deposit you would like to make. Your deposit does not earn any interest (it is placed into a ‘Deposit Account’), but after 12 months you may be eligible to “graduate” into an unsecured card and get your deposit back. Annual fee: $39
  • USAA Secured Credit Card– the deposit you make for this card, which can be between $250 and $5,000, is placed in a 2-year Variable Rate CD. On one hand, this means your deposit is locked in for two years, but on the other, at a current annual yield of 0.74%, it has one of the highest CD returns out there. This secured card is available as an American Express and a MasterCard. Annual fee: $35
  • US Bank Secured Visa – you can make a deposit from $300 to $5,000 into a US Bank Savings account, which currently yields 0.05% per year. Your line of credit is written out for the same amount as your deposit, and US Bank reconsiders cardholders for an unsecured credit card after 12 months of good standing. Annual fee: $35
  • Wells Fargo Secured Visa – users can deposit $300-$10,000 for this card, all of which becomes the card’s line of credit. This deposit, however, does not earn any interest (it is placed into a ‘Collateral Account’) so if your goal is to establish credit it is probably best to deposit close to $300 and pay the balance off in full every month. You can deposit any extra money into a savings account or a product that yields at least some interest. Annual fee:$25
  • Capital One Secured MasterCard – this is technically a hybrid between a secured and unsecured credit card. The minimum security deposit ranges from $49 to $200, but the starting credit line starts at $200. So, if you are deemed fairly safe, you may be required to only make a $49 deposit for a $200 credit line. This is a great advantage, as it doesn’t force you to lock in as much money in collateral. Any additional deposit you make over your required minimum translates into a higher credit line, up to $3000. Annual fee: $29

In deciding how much to put down as a deposit, consider your reason for getting a secured credit card. If you plan on only using your card for a few small charges each month, you may as well make a deposit close to the minimum requirement rather than lock in more of your funds into low- or no-yield accounts. On the other hand, if you see this as a step into embracing a credit card-filled life, it may be worth making a larger deposit so that you can get used to statements and paying off balances that more accurately reflect those you expect to face once you have better access to credit. But whichever you choose, don’t forget to pay off your balance in full so that you don’t erase the benefits of having a secured credit card with the ding of a default on your credit history.

And once you’ve proven your creditworthiness with your secured card for a year or so, start looking for unsecured credit cards. Yes, you too can eventually have one of those cards that doesn’t require locking in money upfront and earns rewards!