Is Amazon's exclusive Prime credit card a good deal?
The online retail giant Amazon is rolling out another product to lure its loyal customers. This time, it鈥檚 a credit card with appealing terms.
The search company聽collaborated with JP Morgan Chase for聽, announced on聽Wednesday. The new card rewards its cardmembers as much as five percent on any purchase from the website, according to a press release from the company聽鈥� while, for Amazon and Chase, it represents one more way to capitalize on the website's massive customer base.
The idea of the card, which targets Amazon Prime members, is not brand new. It is built upon the existing Amazon Rewards Visa Signature card, which currently offers a three-percent reward. Cardholders who are also Prime members will be automatically upgraded, according to Amazon. 聽
鈥淲hat's new is accelerating and improving the rewards process to make it a more enticing proposition to cardholders,鈥� David Robertson, publisher of the Nilson Report, a trade publication on credit card industry, tells 海角大神. 鈥淎nd that's really where the game is these days and for the last two years or more鈥nd there's a real battle to try to become first or top in wallet.鈥�
In addition to five percent back on all purchases from Amazon鈥檚 website, the card offers a two-percent cash reward at restaurants, gas stations, and drugstores, and one percent everywhere else. It does not charge an annual fee or a foreign transaction fee; to be eligible, however, customers must pay $99 per year to join the company鈥檚 Prime membership.聽
鈥淲e are adding even more value to Prime by offering rewards on Amazon and everywhere else you shop,鈥� Max Bardon, a vice president at Amazon, said in a statement.聽
Zack Friedman, founder of Make Lemonade,聽a finance platform that offers financial advice, said this card is Amazon鈥檚 strategy to .
鈥淐learly, Amazon wants to increase its Prime membership base, which has been a major profitability and growth engine for Amazon 鈥nd an effective strategy to retain its customer base,鈥� he wrote in a piece on Forbes.
Created in 2005 as a way to offer free two-day shipping, an Amazon Prime membership now includes streaming music, TV shows, and movies, among other benefits.聽
鈥淚t鈥檚 interesting for Amazon in that they keep layering on more and more things to make that Prime membership more and more attractive,鈥� Matt Schulz, a senior industry analyst at Creditcards.com, tells the Monitor. 鈥淚t鈥檚 interesting to see how they鈥檝e expanded that to grow the loyalty.鈥澛�
Mr. Robertson says offering credit is also Amazon鈥檚 way to generate additional profits from its existing customer base.
鈥淎t some point, you get to the top end of what your potential customer base is, and then what you have to do is to mine your existing customer base for additional profits, and that's where revolving credit cards come in,鈥� he says.
According to Consumer Intelligence Research Partners, had a Prime membership in early 2016, reaching 54 million聽鈥� a customer base that represents potential for Chase, as well.聽
鈥淗undreds of millions of people shop at Amazon.com and there is no better way to earn rewards for their purchases than Chase鈥檚 new Amazon Prime Rewards Visa Signature Card,鈥� Kevin Watters, the chief executive of Chase card services, said in a statement. 鈥淲e are thrilled to be working with Amazon to offer even more value to our cardmembers.鈥�
Analysts say this newly designed metal card could be Chase鈥檚 way to replicate the early success of its popular聽Sapphire Reserve card.
鈥淭his is another example of Chase going all out to attract high-end credit card customers,鈥� Mr. Schulz says. 鈥淓ven though the Amazon Prime customer isn鈥檛 a monolithic thing, and there's an awful lot of people in that group, it would stand to reason that the average Amazon Prime member is probably a little more upscale than the typical Amazon customers.鈥�
Some observers warn against the potential impact Amazon鈥檚 new credit card might have on聽brick-and-mortar businesses.聽
鈥淭he Amazon Prime Rewards Signature Visa Card is a potential disruptor that can change the retail landscape,鈥� Mr. Friedman tells the Monitor in an email. "By expanding its credit card benefits,聽Amazon鈥檚 strategy is for consumers to make Amazon their default retailer for virtually all their shopping needs."
Yet, while Amazon might attempt to grab more market share through this card, Robertson says, 鈥渢his will not set the world on fire. This is an add-on.鈥�
