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For those looking to build credit from scratch or improve bad credit, common options are store cards and secured cards. Now, Amazon offers a unique combination with its Amazon Credit Builder secured card.
It’s a secured card, meaning it requires a security deposit. Your credit limit will be equal to the amount of your deposit. It’s also a store card, meaning you can only use it to shop at Amazon.com or physical Amazon locations. What makes it unique is the opportunity to pair it with an Amazon Prime membership for an excellent cashback rate.
Key features of the Amazon Credit Builder secured card
$0 annual fee. For those on a tight budget or who just want to be careful with their spending, a card with a $0 annual fee is a good choice.
Generous cash back. If you have an Amazon Prime membership, you’re eligible to Earn 5% back on Amazon.com purchases. This cash back accumulates as rewards points, where 1 point equals $1. But be aware that without an Amazon Prime membership, you won’t get cash back.
An annual Amazon Prime membership costs $119. With the aforementioned cashback rate, it would take $2,380 spent on purchases just to break even.
It might be a better deal for college students, with Prime Student costing $59 for an annual membership. This would require $1,180 in purchases to break even.
Promotional financing. If you make an eligible purchase of less than $149, you’ll get cash back — but for eligible purchases of $149 or more, you can choose between cash back or promotional financing. Promotional financing allows cardholders a window of time in which to pay off the purchase without accruing interest.
Amazon offers two types of promotional financing with this card. The first is “special financing.” Depending on the amount of the purchase, you can get a period of six, 12 or 24 months to pay off the full amount. The second type is “equal pay.” This allows you to pay a set amount of money for a fixed period of time until the purchase is paid off.
If used wisely, promotional financing could offer you the chance to budget for big purchases without paying extra in interest. But if you’re not careful and don’t pay off the whole amount within the allotted time period, you’ll be charged interest from the date of purchase.
Chance to upgrade. After cardholders have the Amazon Credit Builder secured card for at least seven months, Synchrony Bank (which Amazon partners with for credit cards) will evaluate the accounts to see if they’re eligible for the Amazon Prime Store Card. The Amazon Prime Store Card comes with similar rewards, but is a non-secured card, and the security deposit given for the Amazon Credit Builder secured card will be refunded, provided there is no balance.
The best ways to use the Amazon Credit Builder secured card
If you already have an Amazon Prime membership and want to build your credit, this card is a great option. Charge small-ticket items to it and make sure to pay off your balance in full before the due date to avoid interest charges.
Be aware that once you submit your security deposit, you can’t change the amount. So make sure you have a good idea how you intend to use this card before you make the deposit.
What we don’t like about the Amazon Credit Builder secured card
The high interest rate. At 28.24%, this card has a higher APR than even some other secured credit cards. Cardholders who carry a balance could find themselves hit with high interest charges because of this — unless they choose to opt for the special financing offer for purchases over $149.
No rewards without Amazon Prime. If you don’t have an Amazon Prime account and don’t plan to get one, you won’t earn any cash back. The only perk that comes with this card is the promotional financing, which could help with big purchases.
Alternative secured cards to build credit
If you don’t have or plan to get an Amazon Prime membership, there are other credit cards that can help you build credit while offering better rewards or more flexibility.
Here are two such cards:
DCU Visa® Platinum Secured Credit Card
- Annual fee
- Minimum Deposit
- Regular Purchase APR
- 13.50% Variable
The Discover it® Secured offers cash back, an annual fee of $0, and you can use it anywhere Discover is accepted.
The DCU Visa® Platinum Secured Credit Card offers an APR of 13.50% variable. That’s significantly cheaper than the Amazon Credit Builder secured card and the Discover it® Secured. If you think there’s a chance you might need to carry a balance once in a while, consider applying for this card to save money on interest charges.