This looks a very good idea. The interest rate borders on usury so that may keep some aspiring customers away. It is a great place to start if the consumer has enough money to not incur interest charges, but just didn’t have credit history heretofore.

Amazon is trying to push Prime to the limits of the population, but this effort to expand will have a minimal effect. The market size starts at 11.5% of Americans with low credit scores. Limiting this effort with high APR over 28% and a credit line equal to their deposit up to only $1000. Add in prime fees and customers are just not going to be interested in repairing credit this way — it would take too long to build up credit value to buy a car let alone a home or business.

There is little risk for Amazon and Synchrony here, but I doubt Amazon expects anything more than a limited expansion of their prime universe through this “feel good” financial responsibility move.

Amazon almost had me convinced that this was a good idea that actually helped people grow their credit … and then I saw the 28% interest rate. In theory, I love the idea of giving people a path to better credit. If the program also gives Amazon a new path to growth for Prime — which is dominated by consumers with higher incomes and presumably decent credit — all’s well that ends well.

Unfortunately, this feels perilously close to predatory. The average APR for retail store cards last year was 25.64%. Amazon and Synchrony are charging a premium above that exorbitant rate.

As Prime approaches saturation and Whole Foods looks like a quagmire of no real benefit so far, building better rapport/loyalty with the other end of the market is a logical growth strategy.

I’d like to understand how the card “cannot be used for purchases made from Amazon” yet “Members will also gain access to five percent cash back on orders placed on the e-tailer’s site?”

Amazon Prime wants to be synonymous with “trust” and “confidence” and “go-to.” For what earthly reason would they wake up one day and say, “…think I’ll go into the usury business”? Total head scratcher. Same idea with an advantageous interest rate = terrific.

Some will see this as a way to make money with high interest rates. Others will recognize there is a cost associated with taking on a credit risk, which is why the “deposit” and the higher rate is necessary. And, then others will see that Amazon is working on building another group of customers that they currently don’t have access to. I think that’s the bigger play: more Prime members.

This is very reminiscent of how Sears (and Montgomery Ward) built its relationship with younger customers just starting out decades ago. Not only do you potentially acquire new customers with high LTV at a comparatively low cost, you deal with a real point of friction. Seems like a very sensible idea.

Several bad credit consumers may find the Amazon Credit Builder card appealing, as it seems like a compelling way to improve their credit. However, it may back-fire on some consumers that can’t afford to pay-off the total balance each month. With a steep interest rate of 28.24% on outstanding balances, consumers that carry a balance will actually lower their credit score and can potentially create more credit problems. If Amazon truly wanted to help consumer with credit problems, they would offer a credit card program that has reasonable interest rates. However, the ultimate goal for Amazon seems to be interest income instead of expanding its base of loyal customers or “helping” consumers improve their credit scores. Maybe they are taking a page from the old Sears book. Many companies like Sears and the department stores where the first place young people just starting out could begin to establish credit. These programs also had high interest rates and many retailers really mined the grey area between credit worthy folks and the deadbeats and made a tidy… Read more »

As a former associate used to advise me, “Can’t hurt … Might HELP!”

This is a credit card leveraging Amazon. It is not embracing Amazon shoppers, since prime members cannot use it to their advantage and use it for their purchases from Amazon. Why would Amazon embrace this when they are excluded from the purchases of their audience? Good or bad credit, Amazon wants their reach to grow and their audience to include as many wallets as possible. This product does not embrace this outlook. Excluding Amazon Prime or any Amazon member seems to defeat the entire purpose that Amazon has spent years building.