Amazon launches Credit Builder card for 'underbanked' customers

The online retailer is offering a credit card to 'underbanked' customers with bad credit.

Amazon partnered with Synchrony Financial to create the Credit Builder card. The card is for ‘underbanked’ customers who want to repair their credit.

Amazon Credit Builder card details

Amazon already has the Amazon Prime credit card for customers. The Amazon Store Card Credit Builder is similar to the Amazon Prime card with an interest rate at 28.24% and 5% cash back rewards on purchases. However, customers have to make a security deposit of $100-$1000 to open the secured Credit Builder card. The amount that consumers deposit is the Amazon Credit Builder card’s credit limit.

Benefits of the card include no annual fee and financial literacy tips sent to consumers as they use the card. Once customers pay off the balance of the Credit Builder card, they’re eligible to apply for an unsecured card with a higher credit limit.

Why is Amazon offering a credit card to the ‘underbanked?’

The card could be popular with US consumers that are ‘underbanked’ with bad or no credit. A 2017 Federal Deposit Insurance Corporation (FDIC) survey found that 25% of US households either have low credit scores or no bank account.

Tom Quindlen, chief executive officer (CEO) of Synchrony’s credit card division, explained that Amazon wants to extend credit to a new customer base.

‘There’s always going to be people that we can’t give credit to — this is a large population that we weren’t able to reach. It’s a new segment of the market,’ said Quindlen.

‘It’s putting credit in the hands of people in a responsible way,’ added Quindlen.

What do credit card experts say about Amazon’s Credit Builder Card?

Ted Rossman, a credit card analyst, said that the Amazon Credit Builder card could help customers rebuild their credit.

‘If used properly, this card can help you improve your credit while saving on interest or pocketing an attractive cash back return,’ said Rossman.

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