One of the biggest mistakes anyone can make is ignoring their credit score. That is why it is vital to building your credit as much as possible. There are many ways to do this, but one of the newest ways to do so is the Amazon Credit Builder Card, a common store card offered.
But why is your credit score so important?
Your credit score represents how reliable you are when it comes to borrowing money and how well (or poorly) you manage your debt.
It’s imperative, especially for potential business owners, to have a good credit score.
When you have a good credit score:
- you have more chances to be approved for a business loan or credit card
- you can get better terms and lower rates
- you can qualify to get a loan to buy a house
In this post, we will be discussing the card and how it differs from other credit cards.
What is Amazon Credit Builder?
Much like it sounds, Amazon’s store card offers customers a way to build their credit. It acts as a standard credit card with a credit line that is equal to a security deposit made by the cardholder to Amazon’s bank of choice (Synchrony Bank).
You can use the card to make purchases, and your timely monthly payments will help build your credit score.
How Does The Amazon Credit Builder Work?
After submitting your application and being approved for an Amazon Card, you will have to make a refundable security deposit (which acts as collateral).
What is collateral?
In this case collateral is money that you give to Amazon in case you fail to make the promised payments, Amazon can use the collateral to recoup the losses.
This deposit will act as your credit line.
What is a line of credit?
When talking about credit cards, a line of credit (or credit line) is the limit or maximum amount of money you can “borrow” with your card.
So, if you deposit $100, that’s the maximum amount you’ll be able to spend with your card.
If you have made all of your payments in full, the deposit can be refunded if you close your account. If you haven’t made all your payments, the remaining balance will be deducted from the deposit.
With the Credit Builder, you can make payments on anything ranging from buying new equipment to getting inventory.
Like a regular credit card, to pay off your debt, you simply make monthly payments either equal to the full balance or a minimum payment.
How Is the Amazon Credit Builder Card Different From Other Cards?
Those familiar with credit cards know that they are different than regular prepaid cards or debit cards. For one thing, the payments made with them come from a credit line, not a bank account or prepayment. You also have to make monthly payments for however much you spent using the credit card, usually with significant interest. You probably know about visa credit cards and others credit cards companies that work in the same way. Many of them are in the market and be secured cards to use*.
But the real question is:
How is the Credit Builder different from other credit cards?
💳 For one thing, there is no interest charged if the payments are timely and paid in full.
💳 Another difference is that you can only use the card for purchases made through the Amazon store. This also gives the card certain advantages since it comes from Amazon itself.
💳 If you have Amazon Prime, you get 5% cashback on all purchases made with the card.
💳 There are deferred interest as well as equal pay plans for card owners.
💳 Cardholders also have the opportunity to upgrade to an unsecured card after they make enough timely payments.
💳 Amazon also gives a $10 gift card to approved users.
Is an Amazon Credit Builder Card Worth It?
To find out whether an Amazon CBC is right for you, you need to consider its pros and cons carefully.
- 5% cashback on all Amazon purchases (highest cashback of any Amazon or third-party card for the site’s goods).
- Having a secured credit card means less risk if the card gets stolen (it only has enough credit to match your deposit).
- It’s an easy way to build your credit.
- If you have bad credit, this card will help you.
- If you make payments on time, you can get approved for an unsecured card with a bigger credit limit and more benefits.
- Certain products give Credit Builder cardholders access to unique financing options, including deferred interest and equal payments.
- Missing a payment on the Credit Builder Card will cost you dearly. Not only will it hurt your credit score, but there’s a 28% interest charged on the late payment. Try to be good at Amazon credit card payments to reduce any impact on your credit history, (you can check your own at the major credit bureaus).
- The card has no annual fees, but many say it’s easier to get approved if you are an Amazon Prime member (which, of course, does have a yearly fee of $119).
- If you are offered special financing and don’t pay on time, you will have to pay retroactive interest on the product.
- You cannot purchase anything that isn’t found on Amazon, giving the card less flexibility than other credit cards.
Amazon Credit Builder Card: FAQs
Is an Amazon credit card good for building credit?
This Amazon store card was created precisely with that purpose in mind. So if you just realized your credit score is subpar, we recommend you get an Amazon Credit Builder or a Secured Credit Card.
What is a secured credit card?
They are credit cards that need a deposit that works as your line of credit. For example, if you make a $500 deposit, then you can only spend $500 with the credit card.
How Do You Apply For The Amazon Credit Builder Card?
Applying for the card is quite simple; you just have to go to the Credit Builder Card page and follow all of the on-screen instructions.
If your application is approved, you have 60 days after the approval to make a security deposit of at least $100 (remember that you will only have as big of a credit line as the security deposit you make).
How Do You Cancel The Amazon Card?
To cancel the card, you have to contact Amazon and close the account. Once you close the account, you can apply for a refund of your security deposit.
Can you get an Amazon credit card with bad credit?
If you’re looking to get a regular Amazon credit card and you have bad credit, you might not get approved. But that’s exactly what the Amazon CBC is.
You can get a Credit Builder if you have bad credit, and you can use it to improve your credit score and, consequently, get an unsecured credit card.
What is an unsecured credit card?
They are your run of the mill credit cards. You don’t need to make a deposit, the bank gives you a line of credit. When you use the credit, you have to repay it.
There are always options even if you have bad credit or no credit
If you are looking to build your credit and/or your bad credit is preventing you from other credit-building opportunities, the Amazon Credit Builder Card might seem like a great idea. It is essential to use caution, however, as the card does pose certain risks.
If you already have bad credit, making payments late could put you in a deeper hole. Not to mention that Amazon punishes you heavily if you do not make payments on time.
But if you are organized and good when doing amazon credit card payments, you could see a substantial rise in your credit score, which could open up more opportunities.
At the end of the day, you simply need to weight the costs and benefits as it pertains to you and your business.
If you have bad credit, the Amazon Credit builder may be a good way for you to remedy that.How to get a business loan with bad credit