Amazon offers its Prime customers a free Visa credit card. TECHBOOK took a closer look at the offer.
Shipping giant Amazon offers its customers with a Prime subscription in cooperation with Landesbank Berlin (LBB) a free Visa credit card. In addition, there is usually a starting credit of 20 euros – more within different campaigns – as well as reimbursements in the form of Amazon credit. That sounds attractive. But is there a catch? TECHBOOK looked at the fine print and interviewed an expert.
What is the Prime credit card?
The Amazon credit card is a “real” credit card. This means that you have a credit limit that is given to you as a loan if you are charged. Debit cards, which immediately balance their credit limit with a connected checking account, work differently. Collective credit cards, on the other hand, debit the collected bills from a connected checking account at the end of the month.
With the Amazon credit card, you can also have your credit card charged beyond the month. Partial payments are therefore possible. However, high fees in the form of 14.98 percent debit interest per year are due. You should therefore set your percentage rate to 100 percent in the settings to ensure that the credit limit is balanced at the end of the month. Because a partial payment with such high interest is not worthwhile for the normal consumer with a current account, especially since the interest for an overdraft on the current account is often lower.
The free replacement and emergency cards are also positive for customers. “Many other providers do not have an emergency card in their program at all or charge considerable costs for it. Even a replacement card is not always free in Germany,” explains financial expert Gregor Janecke when asked by TECHBOOK.
Also Read: What are the Differences Between Debit Card and Credit Card?
This is what the Amazon credit card offers
Anyone who opts for the Amazon Visa card as a Prime member will receive a starting credit of 20 euros in addition to the services mentioned. The credit card itself has no basic fee, you only pay 7.99 euros a month or 69 euros an annual fee for the Prime membership.
Incidentally, it is theoretically possible to claim the starting credit and then cancel it again. However, expert Janecke advises against it. “If you apply for several credit cards and cancel them regularly, it doesn’t have a positive effect on your creditworthiness,” says Janecke. “Up to three credit cards at the same time are usually not a problem – but you should build up your card master step by step.”
In addition, customers who have made purchases on Amazon with the Prime credit card will receive a rebate of three percent. Converted, a Prime customer receives three points for every full euro of sales for a purchase from Amazon. However, this refund is only given as an Amazon credit and cannot be paid out. 300 points are worth 100 euros on Amazon.de. However, if you use the card to pay somewhere other than Amazon, for example at other online shops, in supermarkets or at gas stations, the refund is only 0.5 percent.
210 euros credit line guaranteed
As soon as the Amazon Prime credit card has been approved, the customer receives a provisional credit limit of EUR 210. After the customer has been successfully identified and the creditworthiness checked by the bank (this takes about 14 days), customers automatically receive an individual credit limit.
According to Janecke, the card is therefore also suitable for people with a poor credit rating. “Anyone who would like to use the Amazon visa can top up their credit limit,” says the financial expert. Simply transfer the credit to Landesbank Berlin (payee: Amazon.de KartenService, IBAN DE83 1005 0000 6603 1979 00). Enter all 16 digits of the Visa card as reference.
advantage over the competition
“From a marketing point of view, I think this is a very clever move by Amazon, since they use the credit card to tie customers even more closely to their ‘Prime’ loyalty program,” explains Prof. Dr. Martin Fassnacht from the WHU business school to TECHBOOK. “Customers who do not yet have Prime are also being lured by Amazon to paid membership with the fee-free card.” Having a Prime membership is more likely to buy from Amazon than the competition.”
According to Amazon, it has more than 100 million Prime customers worldwide. This alone brings together income for the shipping giant of several billion euros. “Indirectly, the visa holders pay 69 euros a year for this and other services,” explains Fassnacht.
The disadvantages of the Amazon Prime credit card
LBB, as the issuer of the card, requires Casino, lottery and betting turnover hefty fees. In the case of such risky transactions, the bank then charges three percent of the transaction. Irrespective of the three percent fee, a fee of at least EUR 7.50 is also due when the domestic credit limit is debited. Paying for a lottery ticket at the kiosk costs extra, unless you load money from an account onto your credit card beforehand.
The same three percent fee on turnover also applies to cash withdrawals from German ATMs if you don’t have any credit on your credit card. Anyone who travels a lot will not be happy with the card either: the issuing bank charges 1.75 percent foreign currency fee on all transactions abroad. The minimum fee of five euros of the three percent sales fee is slightly lower. The expert Janecke says: “The card is of course very attractive for purchases on Amazon. Anyone who wants to withdraw cash or pay abroad is better off with other credit cards on the market.”
LBB will phase out card business at the end of 2022
The terms and conditions of the Amazon credit card could change in late 2022. The previous partner in the credit card business with Amazon was the Landesbank Berlin, which announced that it wanted to end the card business. According to the bank, the project will end on December 31, 2022. Who will be the new partner in the credit card business with Amazon is still open.
TECHBOOK means
“Anyone who buys a lot from Amazon actually gets an exciting means of payment with a three percent refund. But buy a credit card for this purpose, which may affect your own creditworthiness? That would be nothing for me! You should also pay attention to the hidden costs – the Prime card is only recommended to a limited extent as a means of payment in everyday life.” Philippe Fischer, editor
No basic fee for Prime members, rebate on Amazon