The New Amazon’s Credit Builder Credit Card

4 minutes

So there is a new discussion being had amongst those savvy on credit cards and that’s whether or not the brand new Amazon Credit Builder Credit Card is worth signing up for. Now in general, yes credit cards are generally pretty good to sign up for because the average American has 3 credit cards, but to reach the perfect 850 it’s said that you need to have 21 lines of credit open (including loans).

But for the average American reading this, it’s better to know who this card is and isn’t for, what the features of this card is, and what some smarter alternatives might be depending on you and your individual situation.

In today’s article, Financer has delved deep into the legalize of the new Amazon Credit Builder Credit Card and determined what you as an American citizen would want to know the most before applying.

The Purpose of The Amazon Credit Card Builder

This card is considered to be targeted at two main groups of people. The first group is a person with no credit history, and the second group Amazon is primarily targeting is those who have bad credit.

And what this means, in a nutshell, is that Amazon has come out with their very own secured credit card. For this reason alone, this card is actually more accessible and probably more appropriate for the student who can’t tag along as an authorized user on their parent’s account for whatever reason, and are looking to begin a credit line history. If you’re unfamiliar what a secured credit card is, it’s basically a credit card you put a deposit on in order to prove your creditworthiness to the bureau. So if you were to put $200 on a credit line, your creditor would give you a $200 line of credit, and then if you were to never pay off your card, they’d be able to at the very least, take your deposit money to cover the cost.

The point of secured cards is usually meant to build your credit over several months and show lenders your history of spending and repayment in order to show your worthiness for establishing new and higher lines of unsecured credit.

The Caveat Making the Amazon Credit Builder Card a Good Idea for A lot of People

If you’re one of these people with bad credit because of mistakes in the past, or because you’re just entirely new to credit in general, the credit card from Amazon comes with a feature that most people would be pretty happy about. If you make a deposit of $1,000, you’ll have a credit line of $1,000 on your card; and after seven months of making payments on time, and paying off your card completely, Amazon will then review your credit card in order to see if you’re eligible for an upgrade to an unsecured card.

If your account has been found in particularly good standing, what will end up happening is Amazon will then refund you your deposit and then bump you up to the same version of their credit card with an unsecured credit line, potentially with a higher credit limit.

What Make’s Amazon Credit Builder Card Different than Most Secured Credit Cards?

Well, the biggest thing that has already stood out is that the card actually comes equipped with sign-on bonuses. When you put this head to head with a bank, the strategic spender could make a debate that it’s actually more advantageous to build their credit with Amazon than with your bank. Bank secured credit cards are generally widely available and typically are more generous with your credit line, however, it’s because you’re usually prequalified at any time for the banks secured cards that make the cards less desirable.

One strategy a lot of people neglect when establishing new lines of credit is Chase’s 5/24 rule (read more here). Meaning that you can’t get more than 5 lines of credit in 24 months. So because Amazon comes with sign up bonuses, to get the most value back in your pocket, it would make sense to establish credit with Amazon first, get their sign-on bonuses, then apply for Chase cards once you’ve built your credit because of their extremely generous sign-up bonuses, and once you hit the 5/24 rule, feel free to get a card through the bank you’re most comfortable with that usually doesn’t offer any incentive other than lower apr rates.

What are the Sign on Bonuses?

There are several bonuses that come equipped with this card, and while meager when compared to other Chase card’s sign-on bonuses, secured credit cards generally aren’t meant to have these bonuses in the first place.

The first thing that usually catches most people’s eye is the free $40 gift card. The next most striking feature would be 5% back on Amazon.com purchases if you have an Amazon Prime account. There is also no annual fee to your credit card.

What are the Downsides?

Now I’m hesitant to actually call these features true downsides, however, there are some things on this card you should definitely know because they could be different than what you expected.

First off is the APR on these cards, by default, the APR is a whopping 28.24%… Now to those who are new to credit this really isn’t much to actually worry about. You don’t ever pay interest as long as you pay off your card in full every single month. But for shoppers who use Amazon frequently, the card actually does come with special financing as followed:

  • 6 months offer applies to purchases between $149 and $598.99;
  • 12 months offer applies to purchases of $599 or more; and
  • 24 months offer applies to select purchases of $799 or more.

If you’re just starting out with credit, our advice is don’t bother with financing and just pay off your card in full.

Heat from the Press

On June 12th, 2019, this Amazon Credit Builder Card seems to have gone live, and whether to negative press or internal issues, it now appears to be currently impossible to actually apply to the card. This may have been in response to an announcement made a day ago by Bernie Sanders and AOC claiming they will litigate Amazon’s new Credit Builder Card in particular because they were generally upset at how high the APR rate actually is.

This can’t be determined at this time whether or not the card will be available again, the page is still up on the website, however, the button to apply is now missing.

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