Should you consider applying for the Chase Amazon Visa credit card? Before you send off your application you should carefully consider the pros and cons.
After buying things on Amazon.com you have probably been presented with multiple online popup offers to sign up for their rewards card.
The sign-up promotion for the Amazon Visa entailing a $30 discount is not exactly compelling, but even their rewards program isn’t anything to get too excited about. Why? Because ironically, there is a different credit card that can earn you a higher rebate on Amazon.com purchases (more on this in a minute).
The numbers behind the rewards…
- 3% back at Amazon.com
- 2% back at gasoline stations, restaurants and drugstores
- 1% back on all other purchases
Your % back rewards are earned as points and each point is worth 1 penny, so 100 points equals $1 that can be redeemed for Amazon purchases, cash back, gift cards or travel.
That’s fairly standard for a rewards card these days, but when you can get 2% on everything with some cards it suddenly makes it look a lot less interesting. As far as the 3% at Amazon is concerned, funny thing is there are cards out there that allow you to earn that much or more for Amazon purchases.
Here’s an alternate way to earn cash back on Amazon purchases…
Simply apply for a cash back credit card that offers extra cash back for grocery store, office supply or home improvement store purchases.
Then, guess what? Places like Home Depot, and most national grocery chains sell gift cards to other places, including Amazon.com.
So you can buy Amazon gift cards at face value (i.e. you pay $100 for a $100 gift card).
And just to clarify, some of these gift cards have the Kindle logo on them (like the ones sold at the Staples in this photo). But despite the design, these are normal Amazon gift cards that you can use to buy anything they sell on their website. That also includes everything sold by 3rd party merchants through Amazon.com.
Oh and the fun doesn’t stop there. Remember that you can buy gift cards at these types of stores for tons of other places too…
The store branded cards are almost always sold at par (face) value. Typically the only time you will pay a premium is when purchasing general-use Visa or American Express gift cards that can be used anywhere.
This is the best kept secret of credit card rewards because it potentially allows you to get higher percentage cash back on all types of things, even gasoline (notice the Shell cards, pictured above). My favorite are the Starbucks and the “home improvement” card you can use at Home Depot and similar places.
In comparison, the Amazon Visa card’s rewards look fairly lame, right? Especially considering you only get a nominal $30 signup bonus. Many other cash back cards offer a much richer signup bonus, currently.
Going back to the review of the Amazon card…
The rates and fees
As you’re probably already aware, reward cards are not ideal for carrying a balance since their interest rates tend to be higher than non-reward cards. However, in the event you can’t pay your balance in full, the current rates for this card are as follows:
- 14.24% or 22.24% variable, based on your creditworthiness
Is this good or bad? It’s pretty middle-of-the-road considering the card type. But obviously the finance charges from these types of rates would quickly offset any potential rewards you might be earning if you carry a balance on a regular basis.
On the other hand, the store credit card from Amazon (issued by GE Capital) has excessive interest rates to say the least and doesn’t even have a reward program – it’s simply a deferred interest plan card. But when the interest hits, watch out! This is what their application page listed:
Paying punitive interest PLUS no rewards points earned?! If you’re going to apply for an Amazon credit card there is no reason to go with this one. This is probably for people with lower credit scores who can’t get approved for their regular card. If you were thinking about it to finance a purchase, think twice because it uses DEFERRED interest. You would be better off with a regular credit card deal that gave 0% on purchases and balance transfers instead.
The only silver lining for this category is that neither of their cards charge an annual fee.
The benefits (or lack thereof)
As far as the GE store credit card is concerned, there are really no noteworthy benefits worth mentioning.
When it comes to the Chase Amazon Rewards card, it simply offers very basic Visa benefits such as auto rental collision damage waiver, which is secondary coverage on eligible rental vehicles. Aside from that, there’s not much worth mentioning.
Verdict? The Amazon card’s benefits are nothing impressive.
What should you do for 2016?
Should you get an Amazon credit card or not? What about the instant savings? Is it easy to qualify for?
As far as approval is concerned, qualifying for the private label store card will be probably be fairly assured, even if you have mediocre credit. With the Amazon Rewards Visa, the underwriting approval standards will be more stringent. You would probably need a FICO score above 680 to even be considered. But that holds true for most other reward cards, so if you only have average to good credit, there is no reason not to consider the Amazon Rewards Visa from a credit quality standpoint. From a rewards standpoint, that’s another story.
Our recommendation? Here are several cash back programs to consider, offering either a permanent upper tier of cash back on groceries or quarterly rewards as high as 5% on groceries and home improvement stores. The Discover even offers a straight 5% reward on Amazon.com purchases up to $1,500 in Q4 2016.