There is not a person in this world who hasn’t made a poor financial decision. Whether it was buying a new car instead of a more affordable used one, or purchasing another “As Seen on TV” piece of junk, at one time or another you’ve gotten yourself into financial trouble.
Maybe you’ve even severely harmed your credit and are having a hard time climbing out of the hole you dug yourself. Well, the Amazon company may just have created a solution for you. But is it worth the risk?
Juggernaut e-commerce company, Amazon, just launched a new credit card that allows applicants to build their own secured line of credit. It’s called the Credit Builder Prime Store Card, not to be confused with its current Prime Store Card. The main difference lies in how its credit line is established.
The new Credit Builder Program allows owners to submit a refundable security deposit that then becomes the credit limit for the card. Synchrony, the bank that Amazon so often partners with, will accept the deposit and give you the appropriate line of credit for purchases with the new card.
This approach allows those with bad credit to build—hence the name of the card—credit back up slowly so that they can apply for loans or other larger, yet necessary purchases. Essentially, you are paying the bank to give you an opportunity to regain your credit.
You receive the same basic benefits as the other credit cards that Amazon offers. It includes no fee and 5% cash back (prime members only). You are also given the option of no interest for either 6, 12, or 24 months depending on the amount of your purchase. However, you must spend at least $150 in order to be eligible, but this isn’t an unusual stipulation.
The main benefit of the Credit Builder Program is the ability to control your credit again. This card presents a viable option that allows you to responsibly approach credit. It really does give you the opportunity to get back on your feet.
The Credit Builder Prime Store Card is a bit of an enabler. Sometimes giving people options is a dangerous thing. Although some fall on financial hard times due to situations out of their control, many don’t calculate the risk or take fiscal responsibility seriously.
For example, if you make a large purchase and choose a 12-month interest-free payment plan, but then miss a payment it will damage your credit. If you only pay the minimum per month and still have a balance at the end of 12 months, you will be charged a 28% interest rate on the entire purchase price.
Although the Credit Builder Card touts its no-fee benefit, that’s not entirely true. In order to receive the rewards that the card offers, you’ll need an Amazon Prime account which costs $119 a year. You might as well refer to this as an annual application fee since its a requirement.
Another major drawback is the Credit Builder Card is a retail store credit card. This means that you can only use it to make purchases on the issuer’s website/store. This severely limits the flexibility of your purchases. Yes, Amazon offers almost everything you need but you’re forced to buy your items or services from them.
If you are someone that struggles with managing your finances, then you may want to think twice about applying for The Credit Builder Prime Store Card. It’s not a beginner’s credit card but rather it’s to help you build credit—something that’s vitally important.
But if you have just fallen on tough times financially, and know you can climb back on top to gain fiscal control, this card may be a viable option. Once you make 7 straight on-time payments within a year, you’ll be eligible to upgrade to a traditional Amazon Credit Card.