How are they getting 20% on a deposit that presumably could be called up at any time, and how can I get in on it when the stupid "High Yield" accounts I can find top out at around 4%?
How are they getting 20% on a deposit that presumably could be called up at any time, and how can I get in on it when the stupid "High Yield" accounts I can find top out at around 4%?
large businesses have large cash borrowing needs. if they borrow for free from their customers, it reduces the other borrowing they would need to do, so the rate to use is not what interest rate is available to you, but rather how much interest that Starbucks would need to pay for loans that size. Furthermore, whereas dividends are taxed twice (once as profit for the company and again as regular income to the shareholder), interest is a tax deduction to the company (which decreases their taxable profits) and for a percentage of debtholders that interest income is also taxed advantageously.
probably doesn't come up to 20% (unless Starbucks is in junk bond territory) but it's higher than the investment rate of 4% that you're quoting.
They may buy bonds or something like that.
For a 20% return in a year?
The numbers given have to be incorrect.
Oh yeah I wasn't taking OPs number at face value
probably 2%, not 20%.
Yielding a yearly 20%?
If anyone knows of _any_ investment yielding a yearly 20% reliably, I'd certainly be interested. If Starbucks figured that out, I don't know why they're bothering making coffee.
Do they include expiring credit in that figure?
Most of the time they have a buried clause that says that you forfeit all of your credit or get charged an inactivity fee if there have been no account transactions or no credit added for 12 or 18 months. Same reason why you should never buy gift cards.
This may apply in the US but not everywhere. In Canada it is illegal to expire and take back money on gift cards.
So they can keep collecting interest on it forever, but they have to keep the balance for you indefinitely.
The U.S. as well.
By law, gift cards never expire.
Unfortunately, I have several gift cards I didn't use before the store expired.
I’ve seen gift cards work around this by charging a “monthly maintenance fee” after a year of inactivity.