Should You Buy a New Amazon Card for People With Bad Credit History?
If you have bad credit or no credit and really love shopping on Amazon, e-commerce big dad might consider a new credit card option.
The Amazon Store Card version of the credit card offers a 5% cashback return on Amazon Prime purchases, no annual fee, and a $ 40 gift card upon account opening (after your initial deposit has been cleared). Credit Builder users also have access to interest-free financing offers for select purchases that meet minimum spending levels.
But unlike a regular Amazon store card, this one is secure . When you apply, you set a credit limit between $ 100 and $ 1,000 and make a security deposit of that amount to Synchrony Bank, which maintains the card for Amazon. When you make timely payments, all three credit bureaus will be notified. After you make seven on-time payments in a 12-month period, you will have the option to upgrade to an unsecured Amazon credit card.
(To make things more confusing: there is a Credit Builder store card and a Credit Builder Prime store card. You will only get a cash refund if you have a Prime account, but non-Prime users can still get a secure credit card via Amazon.)
You ask, what is the interest rate on this credit card? Oh boy. The annual percentage rate for new Amazon cardholders is 28.24%, and that amount hurts my soul.
But 28% is not uncommon for credit cards these days, especially if you look at secured credit cards ( around 20% ) and store-specific cards ( 2018 average : 25.64%).
This interest rate is a big risk if you are not very good at loan management, no matter how much you want to improve, and the retroactive interest rate on its 0% financing offers could come back to bite you. But since these risks are not unique to Amazon’s credit card offerings, large Prime buyers (looking at you, the people who deliver toilet paper) may find a 5% money back significant.
But let’s not be naive. By providing credit to people who would not normally be eligible to use its credit cards, Amazon does two things: it makes money from your purchases, and it makes money from any deal it makes with Synchrony to manage your card.
And we’re really getting closer to Prime Day, Amazon’s annual birthday celebration that offers hefty discounts – some on items you might want and some on items that no one wants.
If you are truly interested in getting a loan, your best bet is to visit your local bank or credit union to get a secure card. If you’re popping out for a new Amazon credit card, you better have solid control over your budget.