Buzz
If your credit is poor or nonexistent and you're a big Amazon fan, the retail giant has introduced a new credit card worth looking into.
The Amazon Store Card's credit builder option offers a 5% cash back on Prime purchases, no annual fee, and a $40 gift card once your account's opening deposit clears. Users of the Credit Builder also gain access to interest-free financing on select purchases when a minimum spending requirement is met.
Unlike the regular Amazon Store Card, this version is secured. When applying, you'll set a credit limit between $100 and $1,000 and submit a security deposit to Synchrony Bank, which manages the card for Amazon. On-time payments are reported to all three credit bureaus. After making seven timely payments within a year, you can qualify to upgrade to an unsecured Amazon credit card.
(Just to add to the confusion: There’s a Credit Builder Store Card and a Credit Builder Prime Store Card. The cash back benefit is only available to Prime members, but even non-Prime users can still access a secured credit card through Amazon.)
Curious about the interest rate on this credit card? Well, brace yourself. The APR for new Amazon cardholders is a whopping 28.24%, a number that’s downright painful.
However, a 28% APR isn’t all that unusual these days, particularly when you compare it to secured credit cards (around 20%) and store-branded cards (2018 average: 25.64%).
That interest rate poses a significant risk if you struggle with credit management, no matter how badly you want to improve. The retroactive interest on its 0% financing deals could hit you hard. Still, since these risks aren’t exclusive to Amazon’s offerings, loyal Prime shoppers (you know who you are, those who get toilet paper delivered) might still find the 5% cash back offer valuable.
But let’s not kid ourselves. By offering credit to people who normally wouldn’t qualify, Amazon is doing two things: profiting from your purchases and cashing in on whatever arrangement it has with Synchrony to handle your card.
Prime Day is just around the corner, Amazon’s yearly birthday that brings a wealth of discounts—some on things you actually want, and some on things you’d rather avoid.
If your main goal is to build credit, your best bet would be to head to your local bank or credit union for a secured card. But if you’re eager to grab Amazon’s new credit card, make sure your budgeting skills are top-notch.
