Amazon Prime Secured Card benefits guide

If you want to build good credit, it takes time and effort to do so. That’s especially true if you’ve made a few mistakes with your credit in the past, as there can be a lot more hurdles to clear when you have blemishes on your credit report.

But there’s one type of credit card that’s geared toward those who need a little help rebuilding or building credit, and that’s the secured credit card. Secured credit cards, like the Amazon Prime Secured Card*, require you to put down a cash deposit as collateral in order to “secure” a line of credit you can borrow against. Secured credit card issuers then report your credit movements to the three credit bureaus, which helps you improve your credit score over time.

That said, one major downside of secured credit cards is that they come with very few cardholder benefits when compared to their unsecured counterparts, and the Amazon Prime Secured Card is no exception. With the Amazon Prime Secured Card, you won’t get the same perks as more premium rewards credit cards like the Amazon Prime Rewards Visa Signature*.

But even with minimal perks and benefits, this card could still be right for your financial needs. We break down the major benefits of the Amazon Prime Secured Card, so you can make an informed decision about applying for the card.

Amazon Prime Secured Card benefits

Ultimately, the Amazon Prime Secured Card is for people with bad credit or no credit who want the chance to improve their score and overall credit health over time while taking advantage of some Amazon perks.

Before you decide to apply, it may be helpful to know about the Amazon Prime Secured Card benefits you can qualify for.

No annual fee with Prime membership

This secured credit card doesn’t require an annual fee if you’re an Amazon Prime member. While Amazon Prime membership will set you back $139 per year, you get benefits like free two-day shipping on eligible items, free access to Amazon movies and shows, access to music and exclusive deals and more.

If this is something you’re already committed to paying for, it might not be a big deal for you. But if you’re thinking about getting a Prime membership just to get this card, it’s likely not worth it.

You also have to put down a security deposit of $100 to $1,000 as collateral to get this card. However, like with other secured credit cards, the deposit is fully refundable when you close your account or upgrade your card to an unsecured card once you’ve proven your creditworthiness to your issuer.

2% back on Amazon.com purchases

Cardholders earn 2 percent back on Amazon.com purchases made with the card, and these rewards do not expire as long as the account is open. Rewards can be redeemed for more Amazon.com merchandise or for a statement credit on your account.

With a rewards rate of 2 percent back, you will essentially earn $2 in merchandise or cash back for every $100 you spend on the card.

Free credit-tracking tools

Cardholders also get access to a TransUnion CreditView Dashboard that lets them track their credit score and progress over time. Since the main point of getting a secured credit card is to improve credit, this tool can prove immensely helpful over time.

Low ongoing APR

While the Amazon Prime Secured Card does not offer a traditional 0 percent introductory APR promotion, it does offer a low fixed APR of 10 percent, which is not variable. This interest rate is significantly lower than the average credit card interest rate charged right now.

Paying your credit card bills in full and on time every month is the ideal way to build credit and stay out of debt, but sometimes it’s just not possible to avoid carrying a balance on your credit card. If you had to do so with the Amazon Prime Secured, you could at least breathe a little easier knowing you’re not dealing with an APR of 20 percent or more.

Just keep in mind that you’ll still want to come up with a plan to pay down your debt as soon as possible, even with a low APR.

0% APR offers

If you really want your card to include a 0 percent introductory APR offer, then you can opt out of earning rewards in favor of securing a promotional offer instead. However, these 0 percent APR offers aren’t the same as the ones you might see with other cards. They may only be extended for specific purchases, and they set you up on a fixed monthly payment plan that has you paying off your balance by the time the promotional APR offer ends.

These offers also charge fees if you don’t pay your balance off before the intro APR offer ends. On top of that, you’ll have to pay the regular APR of 10 percent on remaining balances.

Generally speaking, Amazon’s promotional APR offers are extended in increments of six, 12 or 24 months.

Ability to upgrade to the Amazon store card later on

Finally, Synchrony Bank— the issuer for the Amazon Prime Secured — says they may consider letting you upgrade to the unsecured Amazon Store Card* in as little as 12 months when you make seven on-time payments on your card and don’t fall behind on other bills. You must also be free of recent bankruptcies, foreclosure, repossession and delinquent accounts to qualify.

Maximizing the Amazon Prime Secured Card

While the limit on your Amazon Prime Secured Card can only be for up to $1,000, you can still use this card to earn considerable rewards and boost your credit in the meantime. The following tips can help you accomplish both goals:

• Pay your credit card bill on time each month. Your payment history is the most important factor that makes up your FICO credit score, so you’ll want to make sure your bills are paid early or on time each month with no exceptions.
• Keep revolving debt at a minimum. Most experts suggest keeping your credit utilization ratio at 30 percent of your available credit or lower. This means never carrying a balance over $300 if your credit limit is $1,000.
• Redeem your rewards for items you need the most. Redeeming rewards for items you need can help you reduce household spending. Fortunately, Amazon.com lets you buy anything from deodorant to dish soap to toothpaste.
• Upgrade your card in as little as 12 months. Finally, you will become eligible to upgrade to another Amazon credit card, the Amazon Store Card, in as little as 12 months. If you take advantage, you’ll earn 5 percent back on Amazon purchases with no annual fee. You’ll also get your security deposit back at this time.

The bottom line

Like other secured credit cards, the Amazon Prime Secured Card can help you build credit — but unlike other secured credit cards, this one also comes with perks uniquely suited to those with a Prime membership who like shopping on Amazon.com. With this card, you’d earn Amazon.com rewards for each dollar you spend and access benefits along the way.

Just remember, you’ll have to put down a cash deposit as collateral, and you can only get perks with your card when used with a limited number of stores on Amazon.com. If you can accept these downsides, you may be able to build your credit enough to upgrade to an unsecured Amazon store card in as little as 12 months. Once that happens, you can start looking at other unsecured rewards credit cards that might suit your needs.

*The information about the Amazon Prime Secured Card, Amazon Prime Rewards Visa Signature Card and Amazon Store Card has been collected independently by Bankrate. The card details have not been reviewed or approved by the card issuer.