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Nerd tip: On Nov. 25, 2019, many consumers received emails from Synchrony regarding the Amazon Credit Builder Card, including messages such as “a trial deposit has been successfully made” or “action required on your application.” These emails were sent to people who neither had the card nor applied for one. Synchrony says it was an "internal error" that "did not involve a data breach or fraudulent activity" and notes that no personal data was compromised. For more information, see NerdWallet's story here.
Amazon is going subprime.
The online mega-retailer has teamed with Synchrony Bank to launch the Amazon.com Store Card Credit Builder. It offers the same benefits as the existing Amazon.com Store Card, except that the new product is a secured card aimed at customers looking to build or rebuild their credit — meaning it requires an upfront deposit.
"Credit Builder enables those on a controlled budget to shop on Amazon.com while building credit with responsible use," says Tom Quindlen, executive vice president and CEO of retail cards at Synchrony Financial.
To be eligible for the new card, applicants must have an Amazon.com account. But as with the normal store card, if you join Amazon Prime you can be upgraded to a Prime version of the Credit Builder card, which offers rewards. The Credit Builder card can be used to make purchases on Amazon.com, at select physical Amazon stores, and for purchases from other merchants who have enabled the "Pay With Amazon" option. Here's what else it offers.
Annual fee: $0
Security deposit: Minimum of $100, maximum of $1,000. (This refundable deposit must be made with Synchrony Bank.) The amount of your deposit will be your credit limit.
New-cardmember offer:A $10 Amazon.com gift card after making an account-opening deposit.
APR: 28.24% (as of June 10, 2019).
Rewards: The baseline Amazon.com Store Card Credit Builder doesn't earn rewards, but cardholders with an eligible Amazon Prime membership are automatically upgraded to the Amazon Prime Store Card Credit Builder, which offers the option of earning 5% back on Amazon.com purchases. (A Prime membership costs $119 a year or $59 annually for a student membership.)
Cardholders may have access to "special financing" offers on qualifying purchases, in which there's no interest if you pay in full within six, 12 or 24 months (the timetable will depend on the amount of your purchase). Keep in mind, however, that these are deferred interest offers, not true 0% APR offers where interest is waived. Pay off your balance in full by the end of the promotional period to avoid retroactive interest charges.
Alternately, you may also be eligible to choose "Equal Pay" financing offers on qualifying purchases, which give cardholders equal monthly installment options of six, 12 or 24 months (also dependent on the amount of your purchase). Unlike with the special financing offers above, you will not pay any kind of interest on Equal Pay offers as long as you make your monthly payments on time and in full.
Note that these promotional financing offers cannot be combined with the 5% back benefit.
Is this a good deal?
For the right person, it could be. You can buy pretty much anything and everything via Amazon.com, making it a more flexible credit-building option than a traditional store credit card.
A student with a thin credit file, for example, might find that even the $59 annual fee for a Prime membership is worth it to get a 24-month "Equal Pay" offer on a big purchase, and then earn 5% rewards on their purchases after the promotional period ends.
It's also beneficial that Amazon Credit Builder cardholders will automatically be considered for an upgrade to an unsecured Amazon Store Card starting in as little as seven months after an account is opened, and the initial security deposit will be refunded if approved.
The ongoing 5% rewards rate is outstanding for a secured card, but for those who aren't eligible for the student rate, paying $119 a year for those kinds of earnings may not be worth it.
» MORE: NerdWallet's best store cards