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People in a cafe drinking coffee and working on laptops.

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Her choice is probably going to surprise you.


Key points

  • Vivian Tu says that Starbucks is the worst bank in the world.
  • Although Starbucks isn’t technically a bank, it has $1.6 billion in outstanding gift card balances. That’s like an interest-free loan from its customers.
  • It also gets to keep a chunk of that money, as it had $196 million in unused gift card balances in 2022.

Some of the big banks definitely don’t have the best reputations. There are plenty out there that pay paltry interest rates and ding clients with costly fees. So, when the subject of the worst bank in the world comes up, you might already have a name that springs to mind.

No matter which bank you’re thinking of, financial influencer Vivian Tu says “you’re wrong.” On her social media channel, Your Rich BFF, she recently revealed that the worst bank in the world is Starbucks. Wait, what? Yes, she’s talking about the coffee giant, and she has an interesting point here.

Why Vivian Tu says Starbucks is the worst bank in the world

Starbucks may not actually offer bank accounts, but it does hold on to a whole lot of its customers’ money. It does so thanks to physical and electronic gift cards. Customers have the option of buying physical gift cards or loading money to an electronic gift card through the Starbucks app using its “Scan & pay” option.

Here’s the shocking part — Starbucks has about $1.6 billion in outstanding gift card balances. That info comes courtesy of its annual 10-K filing with the SEC.

This essentially means Starbucks is getting a $1.6 billion loan from its customers at a 0% interest rate. And it’s paying that loan back in coffee, not cash.

It’s already a great deal for Starbucks, but it gets even better. Some customers don’t end up redeeming their gift card balances, which means the coffee chain doesn’t even need to pay back the full “loan” amount. For the 2022 fiscal year, Starbucks reported $196 million in breakage, meaning unused gift card balances.

With numbers like that, it’s understandable why Tu calls Starbucks the worst bank in the world. It’s holding $1.6 billion, which is far more than what many banks and credit unions manage. It also doesn’t need to pay out any interest, and in fact, it often gets to keep over 10% of that money.

Don’t bank with Starbucks

One of the reasons why customers load money to Starbucks cards through the app is because they earn more rewards this way. You get two stars per $1, compared to the normal Starbucks Rewards rate of one star per $1.

Even with this incentive, there’s still no good reason to give Starbucks a loan. If you want to earn some extra rewards, load money through the app right before you go to Starbucks, and only load the amount you need. If your usual order costs $10, load $10. That way, you get two stars per $1, without leaving unused funds on a Starbucks card.

Or, you can keep it simple and scan your Starbucks Rewards membership when you make a purchase. You’ll earn one star per $1, but it’s easier, and there’s no risk of having money on a Starbucks card that you forget to use.

Whether you agree with Tu calling Starbucks a bank or not, she’s right about one thing. Starbucks isn’t the place to put your money. Keep your cash in quality checking and savings accounts, where it will earn interest and you can access it at any time.

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