An Amazon credit card makes sense only if you spend enough on Amazon to offset the annual fee, and only if you compare the rewards rate to cards with no fee.
Amazon offers two credit cards through Chase: the Amazon Prime Rewards Visa Signature Card (which requires a Prime membership) and the Amazon Prime Store Card (which works only at Amazon). The Prime Rewards card charges no annual fee and gives 5% back on Amazon purchases if you are a Prime member, 2% at gas stations and restaurants, and 1% everywhere else. The Store Card charges no annual fee but only works at Amazon and gives 5% back on purchases there.
The question is not whether the rewards are real — they are — but whether they beat what you would earn with a card that has no annual fee and a flat rewards rate. A card that gives 2% back on all purchases will beat the Amazon card on non-Amazon spending, and may beat it on Amazon spending too, depending on how much you buy there and whether you have Prime.
Key Takeaways
- The Amazon Prime Rewards card has no annual fee, so the only cost is the opportunity cost of not using a flat-rate card instead.
- You need to spend at least $3,000 to $5,000 per year on Amazon to make the 5% rate worth more than a 2% flat-rate card.
- The 2% rate at restaurants and gas stations is standard; many cards with no annual fee offer the same or better.
- The Store Card only works at Amazon, so it is useful only if you do almost all your shopping there and do not want to carry multiple cards.
- Both cards report to the three credit bureaus, so they can help your credit history if you pay on time and keep your balance low.
How the Amazon Prime Rewards card compares to flat-rate cards
A flat-rate card gives you the same percentage back on every purchase, regardless of where you shop. Common examples are cards that give 1.5% or 2% back on everything. The Amazon card gives you more on Amazon (5%) but less everywhere else (1%), so the comparison depends on how much of your spending happens at Amazon.
If you spend $10,000 per year and $4,000 of that is at Amazon, a 2% flat-rate card would earn you $200. The Amazon card would earn you $200 on Amazon (5% of $4,000) plus $120 on the other $6,000 (1% of $6,000), for a total of $320. In this case, the Amazon card wins by $120 per year. But if only $2,000 of your $10,000 is at Amazon, the flat-rate card earns $200 while the Amazon card earns $100 on Amazon plus $80 on the rest, for a total of $180 — and the flat-rate card wins.
The break-even point is roughly $3,000 to $5,000 per year in Amazon spending, depending on the flat-rate card you compare it to. If you spend less than that at Amazon, a flat-rate card will earn you more money overall. If you spend more, the Amazon card pulls ahead.
What the Prime membership requirement actually means
The Amazon Prime Rewards card requires an active Prime membership to earn the 5% rate on Amazon purchases. If you do not have Prime, you earn only 3% at Amazon, which is less attractive. Prime costs $139 per year (or $14.99 per month), so you are already paying for the privilege of the higher rate.
This matters because the card itself has no annual fee, but the 5% rate is conditional on paying for Prime. If you already have Prime for the shipping and video benefits, the card is a natural addition — you are not paying extra for the rewards. But if you would buy Prime only to unlock the card's rewards, you need to earn at least $139 per year in extra rewards to break even, which means you need to spend roughly $2,800 per year at Amazon just to cover the Prime cost.
The Store Card does not require Prime and has no annual fee, but it only works at Amazon, so it is useful only if Amazon is where you do most of your shopping.
Annual fees and other costs to watch
Neither the Prime Rewards card nor the Store Card charges an annual fee, so there is no yearly cost to carry them. This is different from premium cards that charge $95, $150, or more per year and try to justify the fee with travel credits or other perks.
The real cost of an Amazon card is the opportunity cost: the rewards you would have earned with a different card. If you use the Amazon card and earn 1% on a $500 restaurant bill, but a 2% flat-rate card would have earned you $10, you have lost $5. Over a year of non-Amazon spending, this adds up.
There are also no sign-up bonuses on the current Amazon cards, unlike many other cards that offer $100 to $300 back after you spend a certain amount in the first few months. If a sign-up bonus matters to you, you may want to look at other cards first.
How the Store Card differs from the Prime Rewards card
The Amazon Prime Store Card is a different product from the Prime Rewards card. It gives 5% back on Amazon purchases, but it only works at Amazon — you cannot use it anywhere else. It has no annual fee and does not require Prime membership.
The Store Card is useful if you do almost all your shopping at Amazon and want to maximize rewards in one place. But if you shop at other retailers, you earn nothing there, so you would need a second card for non-Amazon purchases. This makes it less convenient than a single card that works everywhere.
The Store Card also has a lower credit limit than the Prime Rewards card in many cases, and it does not come with the same purchase protections or extended warranty benefits that the Visa Signature designation provides.
What happens to your credit when you open an Amazon card
Opening a new credit card will cause a small, temporary dip in your credit score — usually 5 to 10 points — because the card issuer runs a hard inquiry on your credit report. This dip fades within a few months as long as you pay on time.
Over time, the card can help your credit score if you use it responsibly. Paying your bill in full each month and keeping your balance well below your credit limit shows lenders that you manage credit well. The card also adds to your total available credit, which can lower your credit utilization ratio (the percentage of your available credit that you are using) and boost your score.
If you already carry a balance on other cards, opening a new card will not help much unless you also pay down that balance. The new card's available credit only helps if you are not maxing out your other cards.
When an Amazon card makes the most sense
An Amazon card is worth considering if you meet all of these conditions: you already have Prime, you spend at least $3,000 per year at Amazon, and you do not have a flat-rate card that earns 2% or more on all purchases. If you have Prime and spend $5,000 or more per year at Amazon, the card is almost certainly worth it.
An Amazon card is less useful if you spend most of your money at other retailers, if you do not have Prime, or if you already have a card that earns 2% or more on all purchases. In those cases, the opportunity cost of using the Amazon card instead of your other card will outweigh the rewards you earn.
The card is also worth skipping if you carry a balance from month to month. Credit card interest rates are typically 18% to 25% per year, which means the interest you pay will far exceed any rewards you earn. In that case, focus on paying down the balance first, then think about rewards cards later.
Frequently Asked Questions
Do I have to have Prime to use the Amazon credit card?
You do not have to have Prime to use the Prime Rewards card, but you will earn only 3% back at Amazon instead of 5% if you do not. The Store Card does not require Prime and gives 5% back at Amazon, but it only works there. If you want the full 5% rate on the Rewards card, you need an active Prime membership.
What if I only shop at Amazon occasionally?
If you spend less than $3,000 per year at Amazon, a flat-rate card that gives 2% back on all purchases will earn you more money overall. The Amazon card's 5% rate only beats a 2% card if you spend enough at Amazon to make up for the lower rate everywhere else.
Can I use the Amazon card at other stores?
The Prime Rewards card works everywhere Visa is accepted, so you can use it at any retailer, gas station, or restaurant. You earn 5% at Amazon, 2% at gas stations and restaurants, and 1% everywhere else. The Store Card only works at Amazon and Amazon-owned stores.
Will opening an Amazon card hurt my credit score?
Opening a new card causes a small temporary dip of 5 to 10 points that fades within a few months. Over time, the card can help your score if you pay on time and keep your balance low, because it adds available credit and shows responsible credit use.
What if I already have a 2% cash back card?
If you already have a card that gives 2% back on all purchases, the Amazon card only makes sense if you spend enough at Amazon that the extra 3% there (5% minus 2%) beats the loss of 1% everywhere else. For most people, keeping the 2% card is simpler and earns just as much or more.