An Amazon credit card makes sense only if you spend enough on Amazon to offset the annual fee, and only if you can pay the full balance each month
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 and Whole Foods). Both offer cash back on purchases, but both carry real costs that can wipe out the rewards if you carry a balance or don't spend enough.
The decision comes down to three numbers: how much you spend on Amazon per year, whether you can pay off the card monthly, and what interest rate you would pay if you don't. If any of those numbers works against you, the card probably costs more than it saves.
Key Takeaways
- The Amazon Prime Rewards card charges no annual fee but requires an active Prime membership, which costs $139 per year or $14.99 per month.
- You earn 5% cash back on Amazon and Whole Foods purchases, but only 1% to 2% on everything else, so the card's value depends entirely on how much you buy from those two retailers.
- Carrying a balance at the card's typical interest rate (around 20% APR) erases months of rewards, so this card only works if you pay in full each month.
- If you don't have Prime, the store card version has no annual fee but offers rewards only at Amazon and Whole Foods, making it useful only for those specific purchases.
- A flat-rate cash back card (like the Citi Double Cash or Capital One Quicksilver) may save you more money if you spend less than $2,500 per year on Amazon.
How the Amazon Prime Rewards card's cash back actually works
The Amazon Prime Rewards Visa Signature Card earns 5% cash back on Amazon purchases and Whole Foods transactions, 2% at gas stations and restaurants, and 1% on everything else. Those percentages sound generous until you do the math against the cost of Prime membership.
If you spend $2,000 per year on Amazon, you earn $100 in cash back at the 5% rate. But Prime membership costs $139 annually (or $14.99 monthly if you pay month-to-month). That leaves you $39 ahead. If you spend $1,500 on Amazon, you earn $75 in cash back — which means Prime costs you $64 out of pocket. The break-even point is roughly $2,780 in annual Amazon spending.
The 2% and 1% rewards on other purchases don't move the needle much. Spending $500 at gas stations and restaurants earns you $10 in cash back. That's real money, but it's not enough to justify the card if your Amazon spending is light.
What happens if you carry a balance
The Amazon Prime Rewards card typically carries an APR between 18% and 25%, depending on your credit score. If you carry a $1,000 balance for one month, you pay roughly $15 to $21 in interest. That single month of interest erases the cash back you earned on $1,500 to $2,100 in Amazon purchases.
This card only works as a wealth-building tool if you treat it like a debit card: spend only what you can pay off in full when the bill arrives. If you ever carry a balance, the interest charges will cost far more than the rewards save you. If you're not confident you can pay in full every month, a card with a lower APR or a 0% introductory period would protect you better.
Comparing the store card to the Prime Rewards card
Amazon also offers the Amazon Prime Store Card, which has no annual fee and no Prime membership requirement. It earns 5% cash back at Amazon and Whole Foods, 2% at gas stations and restaurants, and 1% elsewhere — the same structure as the Prime Rewards card.
The store card's main limitation is that it works only at Amazon, Whole Foods, and a few other Amazon-owned properties. You cannot use it at other retailers. If you spend $3,000 per year on Amazon and $1,000 at other retailers, the store card earns you $150 in Amazon cash back but nothing on the $1,000 elsewhere. The Prime Rewards card would earn you $150 on Amazon plus $10 on the other purchases, minus the $139 Prime cost — a net of $21 ahead.
The store card makes sense only if you buy almost exclusively from Amazon and Whole Foods, or if you don't have Prime and don't want to pay for it.
When a flat-rate card costs less
A flat-rate cash back card — such as the Citi Double Cash (2% back on all purchases) or Capital One Quicksilver (1.5% back on all purchases) — has no annual fee and no spending category restrictions. If you spend $1,500 per year on Amazon and $3,500 elsewhere, the Citi Double Cash earns you $100 on Amazon plus $70 on other purchases, for $170 total. The Amazon Prime Rewards card earns you $75 on Amazon plus $70 on other purchases, minus $139 Prime, for a net of $6.
The flat-rate card wins when your Amazon spending is below $2,500 per year or when you want a single card that works everywhere without tracking category bonuses. The trade-off is that you earn less on Amazon purchases specifically, but you earn something on everything else and pay no annual fee.
The hidden costs of rewards cards
Rewards cards can encourage overspending. If you spend an extra $500 per year on Amazon because you have the card, you earn $25 in cash back but you've spent $500 you wouldn't have otherwise. That's a net loss of $475. The card's value exists only in the purchases you would make anyway.
Rewards also come as statement credits or points, not cash. If you forget to redeem them or they expire, you lose the benefit entirely. Amazon's rewards post automatically to your account, which reduces this risk, but it's still worth checking your account periodically to confirm the cash back is actually there.
A straightforward decision framework
Use this framework to decide whether the Amazon Prime Rewards card makes financial sense for you:
- Add up your spending at Amazon and Whole Foods over the past 12 months.
- Multiply that total by 0.05 (the 5% cash back rate).
- Subtract $139 (the annual Prime cost). If the result is positive, the card saves you money. If it's negative, it costs you money.
- If you don't have Prime and don't want it, compare the store card's rewards to a flat-rate card instead.
- If you ever carry a balance, stop here — the interest charges will cost more than any rewards.
If the math shows the card saves you money and you can pay in full each month, it's worth opening. If the math is close or negative, a flat-rate card will likely serve you better.
Frequently Asked Questions
Does the Amazon credit card hurt my credit score?
Opening any new credit card creates a small, temporary dip in your score because of the hard inquiry and the new account. Over time, if you pay on time and keep your balance low, the card will help your score by adding to your credit history and lowering your credit utilization ratio. The damage is minimal and temporary; the benefit builds over years.
Can I use the store card if I don't have Prime?
Yes. The Amazon Prime Store Card requires no Prime membership. It earns the same 5% cash back at Amazon and Whole Foods as the Prime Rewards card, but it works only at those retailers and a few other Amazon-owned properties. It has no annual fee.
What if I spend most of my money at Amazon but carry a balance sometimes?
Don't open this card. The interest you pay on a carried balance will erase months of rewards. If you need to carry a balance sometimes, a card with a 0% introductory APR period or a lower standard APR would protect you better than a rewards card.
Do I lose my rewards if I cancel the card?
No. Cash back rewards post to your account as they're earned. Once they're in your account, they're yours even if you close the card later. However, some rewards cards have terms that forfeit unused points if the account is closed, so check your card's terms before canceling.
Is the 2% cash back at restaurants and gas stations worth it?
Only if you spend enough at those places to matter. If you spend $500 per year at restaurants and gas stations combined, you earn $10 in cash back — less than the $139 Prime cost. The 5% Amazon cash back is what drives the card's value, not the 2% elsewhere.