Imagine a world where your purchases at Amazon could restore or build your credit. Thanks to Amazon’s recently launched Credit Builder card, you could conceivably build your credit score while continuing to make your regular, responsible Amazon purchases. What is Amazon’s Credit Builder card? In a bid to attract those with poor or limited credit history, Amazon is now offering its own version of a secured credit card, designed to be used only at the e-retailer. The Amazon Credit Builder card, issued through Synchrony Bank, comes stacked with plenty of perks to help you reach your credit goals. But behind the exciting premise lurk some potential drawbacks. Wondering whether the Amazon Credit Builder card could be a good fit for you? We tackle the most common questions about this groundbreaking secured card.
What Is Amazon’s Credit Builder Card?
A secured credit card offers consumers with sparse or negative credit history the chance to build credit without posing a financial risk to the issuer. Typically, you put up a security deposit that then becomes your “credit limit.” In the case of Amazon’s Credit Builder card, your deposit amount is between $100 and $1,000. As you make on-time payments each month, your positive credit history is then reported to the three major credit bureaus — providing a nice bump to your credit score. If you successfully make seven on-time payments in a one-year period, you may qualify to upgrade to an unsecured Amazon credit card. Your security deposit will be refunded if you should ever close your account after paying off your balance in full.
What’s the Fine Print?
Amazon actually offers an Amazon Credit Builder card and an Amazon Prime Credit Builder card. As you might expect, the latter option is restricted for Amazon Prime members. The Credit Builder Prime card offers 5 percent cash back on all Amazon purchases. Both cards boast no annual fee and promotional financing, such as the option to pay for larger purchases (over $149) interest-free over six, 12 or 24 months. While both Prime members and non-Prime members have the promotional financing option, Prime members must choose between receiving either the financing or the cashback — you can’t enjoy both benefits at once.
What Makes It Different?
As a secured credit card specific to just one retailer, Amazon’s Credit Builder card is in a class all its own. Taking it one step further, Amazon offers cardholders the chance to track their credit improvements over time. Amazon cardholders receive access to a TransUnion CreditView dashboard, which allows you to view your credit score for free and note any changes as you continue to work toward your credit-building goals.
What’s the Catch?
The interest rate for this credit builder card is steep — 28.24 percent, which is higher than most secured and retail credit cards, but not by much. That means that if you aren’t planning to pay the balance in full each month, this card might not be the smartest way to build a healthy credit profile. Although the special financing options might enable you to pay for a larger purchase over time, you’ll be on the hook for the interest charges on the full purchase amount if you don’t pay it off within the promotional period. You also cannot use the card outside of Amazon — which could limit your shopping options.
Should I Get One?
If you already make regular purchases at Amazon, particularly if you’re a Prime member, signing up for the Amazon Credit Builder card could make sense financially. You are, after all, limited to the relatively low credit limit and theoretically only using the card for items you would already buy. Amazon’s card is also the safer bet as opposed to unsecured retailer-specific credit cards since you’re ponying up collateral from the start. However, a secured credit card will only help your credit if you use it responsibly and make regular, on-time payments. If you think having this card in your wallet would only entice you to make unnecessary purchases — and you don’t want to restrict yourself to shopping only at Amazon — you’re better off looking for a different secured card, perhaps with a local bank or credit union.
Credit Repair – It’s What We Do
What is Amazon’s Credit builder card? It is just another tool to build and repair credit, and help you on the way to financial freedom. At Ovation Credit, we want to be part of your success story. Start your journey today with a free consultation.