Double Blind

I signed up for the Starbucks Duetto Visa card about three or four years ago since I liked to have the occasional conversation and Starbucks was generally a good venue to have it in. The card was simple – every 1% you spent on the Visa went into a “Starbucks money” account, which you can apply to anything in Starbucks. Also, if you spent more than $30 in a quarter, you would receive an extra $3.50 credit (up to $10.50/quarter) which was a nice kickback if you had a particularly high volume in a quarter.

The other good thing about the card was Starbucks was nearly everywhere and the card recently gave you a couple hours of free wireless if you needed it.

There is no way I could financially rationalize going to Starbucks, but with the Duetto card, it was one of my few ‘luxuries’ that I would indulge in once in awhile.

What was great was that the card worked with a minimum of fuss – since I racked up a certain amount of fixed expenses (e.g. cable, gasoline, ICBC, etc.) 1% back is a small kickback which I made great use of.

Much to my disappointment, I received a notice stating that Starbucks would be discontinuing the card, effective at the end of April. Royal Bank, who was the Canadian issuer of the credit card, stated they would give everybody their RBC Gold card as a replacement, and enough points to cover the purchase of a $25 Starbucks card if you decided to continue with them. Starbucks would mail you a Starbucks card for the value of of the remaining Starbucks balance on the card.

The new RBC Gold card is significantly worse than the Starbucks card in that it has a payback ratio of 0.42%, which is significantly worse than the 1% that you had with the Duetto card.

There is zero chance I’ll continue spending money with the RBC card – they have another card that will enable you get a 0.83% payout ratio by spending $35/year, but I do not believe in the concept of paying money to have a credit card.

I have no intention on keeping my RBC credit card, and whenever I receive it, I will just stick it in a filing cabinet and use it as a backup card (which I will never end up using).

I have since start shopping around for another credit card, and have attempted to apply for MBNA’s card which gives you 3% off on gasoline and groceries, and 1% off on everything else, in $50 increments. Assuming this is approved, I am guessing that it will amount to a substantially higher cash savings than with the Starbucks card.

Starbucks made this decision to consolidate their customers into their own card program, which gives a kickback of 1 free drink for every 15 visits, considerably worse than the original card. Their program also costs $25/year to enroll into, and again, I abhor the concept of paying for the right to spend money at an establishment. The only except I will make to this is Costco, which you are paying $55/year to ensure the right that you can return anything you bought for any reason, and the privilege of shopping at what has to be the cheapest place to buy bulk goods with other like-minded suburbanites.

I do not think Starbucks is making a correct business decision – they are screwing around with something that works very well. I know for sure once my Starbucks money runs out, I will likely go to alternative locations (especially non-chains establishments) since there is no way I can rationalize Starbucks without the Duetto card.

This entry was posted on Saturday, March 13th, 2010 and is filed under Commentary, Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.