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.

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During Restaurant Week, get Amex Credit for Dining Out in New York

Next Monday, January 16, New York is kicking-off its 4-week-long Restaurant Week. As mentioned in my previous post, from Monday through Friday, January 16 to February 10, several restaurants in the city will be offering 3-course fixed-price meals for $24.07 during lunchtime and $35 during dinner.

Just like last year, American Express will be one of the event’s major sponsors – but this time with a much simpler promotion for restaurant guests. If you are an Amex cardholder, you can earn a $20 credit on your next billing statement after dining 3 times at any NYC Restaurant Week participating restaurant. You can mix and match the restaurants as long as they’re on the list. Last year’s promotion required a foursquare account and “synching” your Amex card, but this time all you have to do is sign up on the Restaurant Week/Amex webpage.

This offer is limited to the first 15,000 people who sign up, and each cardholder can only earn one $20 statement credit during the promotion period. Prepaid cards and corporate cards are not eligible for the promotion, nor are payments made through Amex’s “expresspay” feature. But if you are a regular Amex consumer or business card holder, this offer can be a fairly good deal. The minimum spend for your dine out to count for the credit is $24, but if you’re choosing from the Restaurant Week menu you’ve already got that covered. And getting $20 for spending $72 (plus tax) on 3 3-course lunches isn’t bad at all. There may be no such thing as a free lunch, but $20 gets you pretty close to a fourth Restaurant Week one.

AMEX offers $20 for 3 Restaurant Week dines in NY

January Restaurant Weeks: Eat Well and Save Money

As your stomach recovers from holiday overstuffing, you might not be too inclined to eat out. But restaurant associations in several major cities are doing their best to change your mind this January with a Restaurant Week. These “weeks,” which nowadays tend to last much longer (see New York’s eight-week “restaurant week” last summer), may be a great time to visit higher-end restaurants you’ve been meaning to check out – or to go to your local restaurant and trade in “the usual” for a 3- or 4-course meal. Participating restaurants offer fixed price meals for lunch and/or dinner, and more and more interesting restaurants have joined in on Restaurant Week throughout the years.

Below is a list of cities hosting Restaurant Week this January – with California and South Carolina both promoting state-wide events. All of these have their own dates and fixed prices, so check not only for your city but also to see whether your January travel plans match up with another Restaurant Week as well.

City Restaurant Week Dates Lunch Dinner
Alexandria (metro DC) January 13-22 $35
Baltimore January 20-29 $20.12 or 15.12 (3- or 2-course) $30.12
Charleston January 12-22 $20-40* $20-40*
Los Angeles January 22-27
January 29-February 3
$16-28* $26-44*
New York January 16-Feb 10 (M-F) $24.07 $35
Philadelphia January 22-27
January 29-February 3
$20 $30
Sacramento January 9-18 $30
San Diego January 15-20 $10-20* $20-$40*
San Francisco January 15-31 $17.95 $34.95
Toronto January 27-February 9 C$15-25* C$25-45*
Washington, DC January 9-15 $20.12 $35.12
Vancouver January 20-February 5 C$18-38*

*pricing varies by restaurant

While most participating restaurants don’t require reservations, Restaurant Week tends to bring in a lot of customers, especially to the more upscale restaurants, so it’s worth making a reservation if you can. Besides, with OpenTable co-sponsoring several of these events, participating restaurants tend to also be members of the online reservations program.

To ease the guilt from dining out after a food-packed holiday, consider the OpenTable points you’ll earn from making your reservation online and how much you’ll save at that restaurant you’ve been meaning check out when you take advantage of its Restaurant Week fixed-price menu instead. Bon Appétit!

New York + Restaurant Week + AMEX + foursquare = $5 off

If you’re in New York this summer, make sure to check out its Restaurant Week event. What originally started as a week in which higher-end restaurants offer affordable fixed-price deals has been extended in several cities, such as Boston and Philly, into two-week events. But New York has taken it to a new extreme – the city’s 2011 Restaurant Week was scheduled for July 11-24, but has since been extended for another six weeks.  The NYC Restaurant Week Extension runs from July 25th to September 5th (excluding Saturdays and, depending on the restaurant, Sundays as well) with lunch specials for $24.07 and dinner for $35.

And American Express and the social media enterprise foursquare have stepped in to make this summer deal even sweeter. If you are a foursquare member, you can get a $5 credit on your Amex statement when you use your Amex card at a participating restaurant.

To get the credit, you have to register (“sync”) your Amex card to your foursquare account, and “check-in” at a participating restaurant during the Restaurant Week Extension period. When you do so, you will automatically get an offer on your phone. After accepting the offer (“Load to Card”), if you spend $24 or more – which you probably will, considering that the lunch deal is $24.07 and dinner is more expensive anyway – and pay with your Amex card, you should get a $5 credit on your credit card statement within 5 business days.

If you don’t have a foursquare account, you can download the program onto your phone for free. Note, however, that Prepaid and Corporate Amex cards and payments using Amex’s ExpressPay feature are not eligible for this offer. And if you have multiple Amex cards, you can only have one “synched” with your foursquare account at a time. Also, you can only earn one of these $5 statement credits per participating restaurant, though there’s no limit to how many credits you can earn if you go to a different restaurant each time. Almost all restaurants in participating in the Restaurant Week Extension are part of the Amex/foursquare statement credit offer, but for a list, click here.

If are in New York before Labor Day, be sure to check their Restaurant Week Extension offer. The list of participating restaurants may be a good place to start if you’re just looking for a place to eat. And even if you already have your dining plans set, you never know – you could find out that the restaurant you are visiting just happens to be participating as well. Then don’t forget to check-in and use your Amex card to get $5 back.

Take-Out May Help You Save Money

“Take-out or eat in?” “Sliced or not?” At a café, we usually answer these questions with an eye to convenience: Do I want to go home and eat on my couch in front of my TV or should I just eat here since I’m already here anyway? And should I have them slice the bagel for me, or do I want to make this a quick stop and can deal with the slicing myself? In some states, your decision will also determine the tax rate and, ultimately, how much you actually spend.

I first found out about the ‘take-out’ tax exemption a few months ago, while ordering some frozen yogurt at a Pinkberry in California. The cashier asked if we would be eating in or out, and when my friend and I hesitated for a moment, he explained that if we ate in, the standard food tax (of at least 7.25%, but higher depending on the county) would apply while if we ate out – including at the benches just a few steps out the door – our yogurts would be tax-free. It wasn’t unbearably hot, so we decided to eat out.

In California, while groceries are tax-free, food served at restaurants, bars, and other places with seating in the premises or close by (e.g., food court seating) is taxable. However, if you order food from these places to go, they may or may not be taxed. Generally, if (1) a business makes at least 80% of its sales through food and (2) it is a drive-in restaurant or at least 80% of its sales are consumed in its premises and/or are hot food items, the business can choose whether to tax certain take-out items or not. Specifically, cold food products (e.g., ice cream and cold sandwiches), hot bakery goods (e.g., fresh from the oven bread), and hot beverages (e.g., hot coffee, tea, and cappuccino) ordered to go may be exempt from sales tax if the business so chooses. Keep in mind, though, that this decision is per establishment, so that, even if one of the stores in a chain makes these sales tax-free, you cannot assume all their other stores do the same.

Starbucks Receipt

As you can see in my receipt for a recent purchase at Starbucks in NY, the 8.875% sales tax was applied to my iced mocha (3.65 x .08875 = 0.32), but not to my marble loaf, since the marble loaf is cold and was not prepared on the premises for my consumption.

Californian food establishments that do not satisfy the two requirements above, such as most ice-cream stores and coffee shops, should always waive sales taxes on these items if ordered for take-out: hot beverages, non-carbonated cold beverages (e.g., juice and iced tea), cold food products, and hot bakery items. Note that soda and alcoholic beverages are always taxable in California, even if ordered to go.

If this break-down seems confusing or arbitrary, consider New York’s tax-exempt food categories, which are different if sold at a “food store” or at a restaurant, deli or similar establishment. Just as in California, hot food items, food sold for consumption in the premises, and carbonated drinks sold at food stores are taxable in New York State. But all sandwiches (hot and cold), candy and confectionery, and “prepared” items are also subject to sales tax, whether ordered to-go or not. “What is a ‘prepared item’,” you ask? Anything that has been handled by the seller or at the establishment so that it is ready to eat as is, such as food on a plate, ice-cream, or self-serve food from a deli. This key description, in fact, earned the Brugger’s Bagels chain an audit last year: while regular bagels are tax-free, sliced bagels are taxable in New York, since slicing makes them ready to eat (I assume none of the tax collectors tear their bagels for eating).

At restaurants, diners, food carts, and similar establishments in New York, the only food items that are tax-exempt when ordered to-go are food and drinks that are unheated and sold in “the same way (in the same form, condition, quantities, and packaging)” as in a supermarket or grocery store. That is, coffee is not tax exempt since it is not cold, iced coffee is not exempt since it does not come the same way as it would at a grocery store (unless you are buying one of those bottled or canned Starbucks drinks), and bagels are only exempt if you’re buying them packaged as they would be in a store.

To sum up, in California, if you want to avoid taxes on bakery items, non-alcoholic and non-carbonated drinks, or cold food products, always choose take-out. If this is a store that mostly serves take-out or cold items, your purchase will be tax-free. If it isn’t, it’ll vary by store but there’s still a chance you won’t have to pay taxes on it anyway. In New York, on the other hand, getting your take-out food purchase to be tax-free may be harder, but, generally, avoid soda and sandwiches, and slice bagels yourself.

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Discover More and Chase Freedom: 5% cash back is great and two ways to get it is even better

I am a huge fan of Discover’s credit card, and I am certainly not alone. Discover has ranked very well in several customer satisfaction surveys in recent years, receiving an award for best call center in the Credit Card Industry in 2010, and coming out on top in various areas directly related to consumers, including ease of online application and general customer satisfaction. Despite this, however, when I praise the Discover More credit card to friends or family, I often hear the same objection: “but no one takes Discover!”

I am guessing this response was probably the impetus for Chase’s launch of the revamped Chase Freedom card in March of last year. The Discover More card, which offers 5% cash back on purchase categories that rotate every quarter is clearly a good idea. Chase makes it even better by trading in the customer service but offering a card that is accepted almost everywhere.

If you are in the market for a credit card with a permanent place in your wallet, both of these cards are worth considering.  Although eligible purchase categories rotate quarterly, 5% cash back on a credit card is an amazing deal right now, especially when the cards come without an annual fee.

Notably, the rotating calendar for which you can earn 5% cash back is not identical between the two cards, so that owning one of the cards does not necessarily mean there’s no point to owning the other. Here are 5% cash back categories for 2010 Chase and Discover side by side:

Importantly, both of the cards cap the 5% cash back you can earn each quarter. Discover’s varies by quarter, such as $800 spent on the categories in the first quarter (effectively $40 cash back) and $300 in July –September ($15 cash back). The Chase Freedom card, on the other hand, caps the 5% cash back to $1500 spent ($75 cash back) on eligible categories each quarter. So if you are a big spender on the cash back credit card, the Chase Freedom card is probably a better option for you. But if you’re a big big spender, getting both cards is even better since you can charge purchases in the categories that overlap between the two cards to the Chase Freedom card, and then charge purchases in the other eligible categories to the respective card.

Excepting the 5% cash back categories and purchases made through the credit card portal, the Discover More card offers a standard .25% cash back on the first $3000 spent each year, and 1% thereafter. The Chase Freedom card is a step above, offering 1% cash back on every purchase not earning 5%. Nonetheless, you may be able to find cards that offer more value than 1% cash back (such as an airline credit card), making these two cards really good secondary cards, used mainly for purchases eligible for the 5% cash back. Besides, neither of the two cards has an annual fee, so you don’t have to reach any spend threshold to make owning either of the cards “worth it”.

Even though Discover’s card came out first, the Chase Freedom card is coming out ahead for now. Discover has the better customer service, but Chase uses the Visa network and is therefore accepted in many more places. Which card offers the better set of rotating categories will depend on your lifestyle, but Chase’s higher cap on purchases for which you can earn 5% cash back continues to push the Chase Freedom card ahead. And Chase’s current offering of $100 as a sign-up bonus only makes the deal sweeter.

If you are going to get only one of the two cards and are not one of those unlucky people who have to use customer service frequently, the Chase Freedom will probably be the one for you. But given the slight difference in 5% cash back categories between the two cards and the lack of annual fees on both, there may also be no harm in letting the Discover More share in your wallet real estate. If you need a nudge, try calling the Discover call center to sign up over the phone and you will see the difference.

Protect Your Money by Checking Your Statements, my experience

To follow up on yesterday’s post, I thought I would add two recent experiences I had that confirm the importance of checking your credit card statements:

Restaurant Bills:  There is a restaurant I’ve been to twice – the latest one quite recently – and that after both times I went, I noticed that my credit card bill was $1 more than what I had signed for once I added tip (I usually write the total amounts on both the restaurant and my copy of the receipt, and make sure to take mine home).  Admittedly, $2 doesn’t amount to that much, but what if it were a restaurant I visited more frequently?  And what if they add $1 to every customer’s receipt?  I doubt I will ever visit that restaurant again, but this experience has taught me to keep my receipts and track the amounts charged to my credit card – just skimming through the bill and verifying that I did in fact eat at that restaurant is not enough to make sure I’m not being overcharged. 

Automatic Payments:  A few months ago I moved and had to transfer my internet and cable service, for which I had automatic payment set up.  I called the company, and was told that they would have to cancel the account linked to my old address and set up a new one with my new address.  As I checked my credit card statement this week, I noticed that there had been no charges from my internet/cable provider in the past three months.  After calling them, I found out that since they had to set up a new account, the automatic payment did not carry over, and my payments were actually overdue!  Of course, I pointed out that I had not been notified that I would be un-enrolled from automatic payment, and the charges were waived.  Nonetheless, even though it was their fault in principle, I bet that if I had gone for many months without paying my bill, they would have been less understanding.

The moral of these anecdotes?  Checking your credit card statements once a month will help you guard your money, enabling you to notice and fight back overcharges and unfair fees.