Is the new Amazon Credit Builder Credit Card a good deal?

If you have bad credit or no credit and really love to shop at Amazon, the big dad of e-commerce is proposing a new credit card option.

The credit-creating version of the Amazon Store Card offers a 5% cash back on Amazon Prime purchases, no annual fee and a $ 40 gift card after opening your account (once your opening deposit is cleared). Credit Builder users also have access to zero-rate financing offers for certain purchases with minimal expenses.

But unlike Amazon's regular store card, this one is secure. When you apply, you set a credit limit between $ 100 and $ 1,000 and submit a security deposit of that amount to Synchrony Bank, which runs the card for Amazon. When you make payments on time, the three credit reporting agencies will be informed. Once you make seven one-time payments over a 12-month period, you will have the option of switching to an unsecured Amazon credit card.

(To make things more confusing: there is a Credit Builder Store card and a Credit Builder Prime Store card.You only get your money back if you have a Premium Account, but non-Prime users can still get a secured credit card via Amazon.)

What is the interest rate on this credit card, ask yourself? Oh man. The APR for new Amazon cardholders is 28.24%, an amount that hurts my soul.

But 28% of credit cards are not uncommon nowadays, especially when looking at secured credit cards (around 20%) and store-specific cards (average 2018: 25.64%).

This interest rate is a big risk if you are not good at credit management no matter how much want to improve and retroactive interest on its 0% financing offers might come back to bite you. But since these risks are not unique to Amazon's credit card offerings, the big Prime buyers (who are watching you, those who get toilet paper delivered) can find the 5% substantial cash back.

But do not be naive. By granting credit to people who were generally not eligible for credit cards, Amazon does two things: make money on your purchases and any agreement you have with Synchrony to manage your card.

And we're really getting closer to Prime Day, Amazon's annual birthday party, which offers plenty of discounts – some on items you might want, others on items no one wants.

If you really want to develop your credit, you'd better go to your bank or credit union to get a secure card. If you move away from your seat with Amazon's new credit card, you better have absolute control of your budget.