Amazon launches credit card for Prime members who want to build credit

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Amazon Prime members who have no credit or need to rebuild their credit will now have a chance to do so.

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The e-commerce giant said Monday it has partnered with Synchrony Financial to launch the “Amazon Credit Builder” for customers who have bad credit or don’t have enough to get another card. The new credit card option will give Prime members the same benefits found on the Amazon Store card, such as 5 percent back for purchases on Amazon.com and no annual fee — although customers will still have to pay Amazon’s yearly membership fee of $119.

“This is a solid option for people who are new to credit or rebuilding their credit after prior missteps, but there are some risks to be aware of,” said Ted Rossman, CreditCards.com’s industry analyst.

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Customers have to apply for the Amazon Store card before being considered for the Amazon Credit Builder. They can submit both applications at the same time, but only one inquiry will be placed on the customer’s credit file.

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Those who are accepted for the Amazon Credit Builder will have to make a security deposit within 60 days to receive a “welcome gift card.” The deposit will be refunded if someone closes their account or upgrades to the Amazon Store card. Those who are accepted but decide to opt out won’t have their credit file impacted by their decision.

"Amazon Credit Builder customers may be eligible for an upgrade to the Amazon Store Card starting in as little as 7 months after an account is opened, and Amazon Credit Builder card deposits will be refunded upon upgrade to the Amazon Store Card," the e-commerce company said.

Credit card holders will be provided with tools to help build their credit under the Amazon Credit Builder.

Rossman noted that the card’s interest rate is very high at 28.24 percent, but cardholders will benefit from the card as long as they pay their bills on time.

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“This is a very unique card, between the secured nature, the 5 percent cash back offer and the two different flavors of 0 percent interest (either 12 months of equal payments or 6/12/24-month 0 percent periods for select purchases),” Rossman said. “If used properly, this card can help you improve your credit while saving on interest or pocketing an attractive cash back return on items you would (hopefully) buy anyway.”