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Amazon This morning, we announced the launch of Amazon Credit Builder, a new secure credit card offered in partnership with Synchrony Bank. As its name suggests, the card is meant for those looking to build their credit history – either to recover from bad credit or to establish a new credit. Like other credit products launched by Amazon, the big advantage of the card is a refund on Amazon.com purchases – in this case, 5% on purchases if the cardholder is a Premium member.
The Credit Builder Card also does not include annual fees, offers special financing for purchases and includes protection against unauthorized charges. As a secured card, Amazon Credit Builder requires cardholders to submit a refundable security deposit in order to obtain a line of credit from the bank. This funding is not available for purchases made with the card, but is used to establish a credit limit.
The deposit can range from $ 100 to $ 1,000, according to Amazon, and is sent by electronic transfer (ACH transfer to Amazon) or by mail.
To pay for purchases, the card is unique in that it allows customers to choose to make equal payments over 12 months or periods of 0% over 6/12/24 months for certain purchases.
The product also includes the ability for cardholders to track the evolution of their credit over time, as they use the card to make purchases on Amazon.com.
Cardholders have access to their own TransUnion CreditView dashboard, where they can view their VantageScore credit score for free, use a simulator to understand the impact of different activities on this point, receive fraud alerts and access credit training to help them improve their performance. credit score.
Synchrony is also available for other financial trainings.
Amazon indicates that Credit Builder customers may be eligible to upgrade the Amazon Store card within seven months of opening the Credit Builder account, at which time their initial security deposit will be refunded.
In general, secure credit cards are offered to people looking to improve their credit – but it is unusual for a retailer to provide their own secure card. For Amazon, however, offering credit to underfunded or unfunded people is another way to expand into a larger market.
Like many online retailers today, Amazon believes that online shopping should not be a privilege reserved for the middle class and more. After all, e-commerce sites often offer better deals than physical stores, and the convenience of online shopping saves customers time and money – which is particularly problematic for those who work multiple make ends meet. .
In order to meet the needs of subtitled and low-credit customers, Amazon is already offering a low-cost version of Amazon Prime to people receiving public assistance programs in the United States, including temporary assistance for needy families. (TANF), the Supplementary Food Assistance Program), and Nutrition Program for Women, Infants and Children (WIC) and, since last year, Medicaid.
More recently, along with other retailers like Walmart, he began participating in a USDA-led trial aimed at allowing SNAP recipients to buy groceries online.
While the new Amazon card may sound good for those who want better credit, it may be better for those who plan to upgrade to the Amazon Store Card in the future, rather than simply repairing their weak history. credit.
Consumers should note that the card has a high APR of 28.24%, which is an average median APR for retail cards (25.64%).
"This is a solid option for people who are new to credit or are restoring credit after previous mistakes, but there are some risks to be aware of," notes Ted Rossman, analyst for the industry for CreditCards.com.
"It's always important to pay your credit card bills in full, and that's especially true with this card. The interest rate is very high – 28.24% – and if you do not pay a promotional offer of 0% in full when the term expires, retroactive interest on the average daily balance back to the origin will be charged. date of purchase, "he says.
However, Rossman concludes that, when the card is used correctly, it could be useful for improving credit while receiving the benefit of cash back.
Customers can visit the Amazon Credit Builder page to sign up for the card.
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