How Starbucks borrows money from its customers at a negative 10% interest rate

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And also paying for mediocre coffee at a massive markup.


Gamestop uses their pre-orders and store credit in much the same way. I have heard of gamers pre-ordering and cancelling on purpose in order to stash money away that they can access later as an impromptu debit account. Starbucks’ business is more lively than Gamestop so i’m sure customers have much more squirreled away in gift cards and whatnot.


It’s basically the same for any company offering gift cards or even store credits. Hell, insurance companies do it as a business model.


Yeah, the article mentions that. It’s why every chain operation in the world has gift cards now. Starbucks is being used as an example here because it has a large balance relative to sales.


When I worked for a small independent restaurant, the owner told me that the percent of gift cards that were actually used was about 60%. The other 40% was just free money for the business.

Don’t buy people gift cards.


Or… just make sure you spend the ones that you have.


premium mediocre


Considering most checking accounts don’t give you any interest based on what you have in there, I don’t see how this is much different. Though I don’t drink coffee - is using a Starbucks account faster or cheaper than your bank account?


The worst is when you get gift cards for stores or services you have no interest in. My wife has a couple of Grubhub gift cards from coworkers. Do we let Grubhub keep the money, or screw the restaurants by using them?


I am guessing the rate of use is higher with Starbucks. It’s also something people can use several times in a week, unlike most other gift cards.


Additionally, this is completely unsecured debt. Should Starbucks ever face financial ruin these cardholders will be the last to be paid.


This may help explain something for me. In California, stores have to cash out gift cards with less than $10 on them. Everywhere I’ve done this has given me cash, but when I tried at my local Starbucks, I was told store policy is that, rather than cash, they’ll mail me a check. While this seems to be legal, it’s clearly designed to disincentivize cashing out the gift cards.


You guys can resell them, likely at a “loss” but its a quick way to flip them. It’s fairly common to see giftcards being resold like that, something like a $20 card at a store being sold for $15 for example. Otherwise you can give them to someone you know will actually use them or donate it.


Faster and more convenient … at times. I am sitting in one now (only coffee shop in walking distance). I arrived shortly before my dog’s favourite person and held the door. I sat down and ordered she waited in line. I had my stuff before she was at the cash register.

You also get a tiny percentage of what you spend back in a token currency to spend on their stuff.

So really not worthwhile. If you end up as regular it might be worth it but once people know that you have the gift cards that you need to make sure get used.


I mean, it’s still better than getting, say… a scented candle!


Credit card churners use gift cards as a way to ‘manufacture spending.’ Not recommended except for the ultra-disciplined.

The only gift cards I ever receive are in the form of gifts. I think I have a Starbucks card in my wallet from a couple years ago with about 40 cents on it. I’m sure many are floating around with that sort of amount.


Yeah, I read an article a few years ago around holiday season reporting on some estimate of funds lost to unredeemed gift cards (or that last $.25 that’s not worth carrying the card around for). It was in the tens of billions, iirc.


Without gift cards the hardworking PC virus-removal experts that diligently notify people of infections would never get paid. Along with Western Union and Bitcoin, these are a foundation of money laundering. There was a period when these gift cards were selling for above face value on eBay.

All because people have an irrational hang up about gifting cash.


This was especially true before they passed a law preventing gift cards from expiring. Now that they don’t expire, I don’t mind them as much. Cash is better though!

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