Amazon Launches New Secured Card
This week Amazon has launched a secured credit card designed to bring a financing option to more of their customers. The Credit Builder Card will be available for consumers who have poor or no credit histories. This credit card will require users to make a refundable deposit before their card is available for use (hence, a “Secured Card”). Consumers who are approved for this card will be eligible for an Amazon Gift Card upon successfully making their security deposit.
Applicants will simultaneously apply for the traditional Amazon Store Card. If they are not approved, they will have the option of the Amazon Credit Builder Card. Only one credit check will be performed during the application process. The good news for customers who are approved for this card? It just so happens to be the top secured credit card around if you are an Amazon fan. And yes – this is for real – read on to learn why.
Features and Benefits
- Earn 5% cash back with Amazon.com on eligible Prime purchases
- New customers receive $40 Amazon.com Gift Card
- Promotional Financing Offers for eligible purchases
- TransUnion CreditView Dashboard Access
- No Annual Fee
For a secured credit card, 5% cash back is completely unheard of. In fact, secured cards that offer rewards at all are nearly unheard of. Some exceptions exist but none of the secured cards found matched the 5% cash back allowed for Credit Builder Cardholders. The 5% cash back is only available for Amazon purchases. While there are some cards available that offer 1% back for purchases, the Amazon Builder Card is going to be a better starting point for most consumers. Low and steadying spending is the best way to use a secured card and that is why the 5% cash back with Amazon is so valuable.
It is important to point out that the Amazon Credit Builder Card allows customers to only make purchases with Amazon.com, Amazon Stores, and vendors which accept Amazon Pay. For a general Amazon Credit Card – Learn more about the Amazon Visa Signature Card.
Furthermore, new customers are eligible for a $40 Amazon Gift Card (more on this below). No other secured cards were found that offer a new customer sign up bonus of this value. Additionally, customers will have access to their credit profile with TransUnion CreditView. This added feature will allow customers the ability to track their credit and learn more about building their credit.
Applying For and Using Your Credit Builder Card
Your card will be managed through Sync Bank and you can make payments online through your Sync Bank Amazon Account. Your initial application will also be completed with Sync Bank.
As mentioned above, customers apply for both The Amazon Store Card and The Amazon Secured Card. Customers will complete just one application and if they are denied for the Store Card, they may then be approved for the Credit Builder Card. If you decide you do not want to open your secured card account, customers simply do not fund their account and the account will not be processed.
Your card will not be available for use until your security deposit is processed. This will typically take about 7-14 days. After your deposit is completed you card will be available for use.
Need a Secured Card That is Accepted Everywhere?
- Top Cards For Fair Credit (Including Secured Cards)
- Best Overall Credit Cards (Including Cards For Bad Credit)
- Top Cards For Bad Credit
Why Amazon Is Offering A Secured Card
During a credit card application, applicants will undergo what is known as a “hard credit inquiry”. This allows banks to review the consumers credit history and determine whether or not they are eligible for the credit card. Banks do this to ensure that applicants will be well suited to manage their credit and pay back the charges they make on the card. Credit card default rates have spiked to a 7 year high and some banks are tightening up their requirements for issuing new credit.
Amazon has an enormous user base. It is estimated that Amazon has a more than 100 million members. Because of this huge amount of customers, many individuals are not suited for a credit card approval. The Credit Builder Card will bring a credit option for consumers who would not otherwise be approved for an unsecured card (like the Amazon Store Card). This card will have the added benefit of providing Amazon members a method to improve and build their credit.
How Secured Credit Cards Work
Most people understand how “traditional” credit cards work. Consumers are assigned a credit limit and can charge their card up to the limit. Cardholders are then required to pay back their debt monthly by making a minimum payment or more. Secured cards are similar – customers are assigned a limit and charges are put on their card. These charges must be paid offer just like a normal credit card. However, unlike an unsecured card, secured cards require the cardholder to make a security deposit. This is a refundable deposit that “secures” the total limit of your credit card.
For instance, if you are approved for the Credit Builder Card and set a $500 limit, you will need to make a $500 refundable security deposit. Customers will be allowed to set their own limit up to an approved amount. This is a one time deposit made when opening your account. Your card will not be able to be used until this deposit has been processed. When the account is closed in good standing (no debt) your deposit will be refunded.
Earn A $40 Amazon Gift Card With The Credit Builder Card
Anyone who has shopped with Amazon has likely been tempted to apply for an Amazon Credit Card at checkout. You will see an offer for Amazon credit which can be deducted from your purchase cost. The Credit Builder Card also provides Amazon Gift Credit. Upon approval and processing of your security deposit, customers will be eligible for a $40 Amazon Gift Card. Your credit will be put on your Amazon account and the credit is typically processed within two weeks.
How Secured Cards Can Help Consumers Build Credit
If you are struggling with a poor credit history a secured credit card can be one of the fastest ways to rebuild your credit. First, consumers should read up on what credit history is and methods to improve your credit. Once you have a strong understanding of credit and credit scores it is time to rebuild – The Amazon Credit Builder Card is one such card that can assist consumers with this process.
When you make purchases on your Amazon Credit Builder Card your payment history is reported to the three major credit bureaus. This will begin to establish a positive credit history. Using a secured card responsibly and making payments on time every month will quickly improve your score. Consumers should attempt to keep their total card balance as low as possible and strive to make the full payment of your card each month. Not only will this have a positive impact by reducing your credit utilization but you will also not be subject to expensive interest charges.
Final Thoughts – Best Secured Card Available?
Overall, this is an amazing credit card for consumers who shop with Amazon and are only eligible for a secured card. With a very nice sign up offer and a huge 5% back with Amazon.com purchases, no other secured card can challenge it in terms of rewards. Customers should use this card responsibly to build their credit. After building up your credit it may be time to find a card that provides rewards for all of your other non-Amazon purchases!
Do you have a favorite secured card? Does it offer rewards? Let us know in the comments below!