If you’re a frequent Amazon shopper, then a credit card that rewards you every time you shop there could be a good option for you.
The Amazon Platinum card does just that, giving you points for your online shopping that can be translated into Amazon vouchers.
But rewards aren’t everything, so before you apply it’s important to understand how interest rates compare and how the card stacks up against its competitors.
The first perk Amazon offers is a £40 gift card, which you’ll get when you sign up. The voucher is loaded to your linked Amazon.co.uk account either when you’re first approved or when you activate your new credit card – depending on whether or not you qualify for ‘instant spend’.
The second major perk is that you get points when you spend online. These can be translated into Amazon vouchers. For every 1,000 points you earn, you’ll get a £10 gift card.
The card also offers:
0% interest on all purchases for three months (as long as you meet minimum payments and stay within your credit limit)
No annual fee
Instant spend – a £500 initial credit limit instantly upon approval for qualifying customers
The ability to add up to three extra cardholders
Amazon says its representative example for rates is 21.9% APR with an assured credit limit of £1,200.
Rates vary from customer to customer, which means you won’t always get the advertised figure, and you won’t know what terms you’ll be offered until you apply. You can do a soft check to see whether you’re eligible for the card and apply for it here. A soft check like this won’t affect your credit rating.
You earn Amazon points by shopping. The number of points you get depends on where you spend and whether you have Prime membership.
Unsurprisingly, you get the most points when shopping with Amazon, but you can get points for shopping anywhere that the Amazon card is accepted.
Amazon Prime members will get three points for every two pounds that they spend on Amazon.co.uk. Non-Prime members get just 1.5 points for every £2. You also get half a point for every £2 spent on your card elsewhere.
To translate your Amazon points into rewards, you need to earn a lot of them. For every 1,000 points you spend, you’ll get a £10 Amazon voucher.
The least possible spend works out at around £668, but if you’re not buying through Amazon you’ll need to spend £4,000 to see any reward.
|Type of spending||Points per spend||Cost per £10 voucher earned|
|Amazon Prime (members only)||3 points for £2||£668|
|Amazon (non-Prime)||1.5 points for £2||£1,334|
|Other spending (not on Amazon)||0.5 points for £2||£4,000|
You don’t get points for balance transfers or for any cash related transactions. Cash-like spending includes things such as gambling, lottery tickets, foreign currency exchange and money transfers.
Reward Points are added to your Amazon Rewards Account – and you should be able to see them online by the end of each day.
You don’t need to do anything to claim the vouchers. Each time you hit 1,000 points a £10 voucher will be added to your linked account automatically. It should appear within two working days of your next statement.
Amazon offers a three-month interest fee-free period on purchases, but this is subject to you meeting certain conditions.
If you fail to make at least the minimum payment on time or if you go over your credit limit, Amazon will take away the 0% rate and you’ll face much higher charges.
In that case, you’ll have to pay Amazon’s standard rate, which is typically about 21.9%. However, rates vary according to customer, so your personal rate could be higher or lower. Once the three months is up, you’ll also have to pay the APR for any purchases that aren’t paid off in full each month.
Another risk is that you’ll prioritise spending with Amazon to get the points – even when you could get a better deal elsewhere. You need to calculate whether the points are worth more than the cost saving elsewhere.
There are plenty of benefits to credit card spending, particularly if you use them appropriately and understand your payment terms.
One big upside is that you get much stronger consumer protection if you pay on a credit card than with any other type of payment. This is because of something called Section 75, which is part of the Consumer Credit Act.
In a nutshell, Section 75 means that you can get a refund from your credit card provider when something goes wrong. You’re covered for items that cost between £100 and £30,000, and you only need to put part of the costs on your card to get the protection for the whole spend.
This refund could be for something as simple as an item not being as described or getting damaged in delivery, but you’re also covered if the provider goes bust. If you need to make a Section 75 claim – Citizens Advice have template letters you can use.
Other benefits of credit cards include rewards, such as airmiles, cashback or points. While these can be nice add-ons, typically you need huge numbers of points to get cash back – giving you a low rate of return.
If you always pay all your credit card spending off in full each month, then rewards are great and essentially bonus money.
But if you think you might not be able to pay your full balance, then rewards will usually cost you more than you earn and instead you should prioritise finding 0% or low-interest deals.
0% purchase deals can also be a great way to spread the cost of a big-ticket item, such as emergency boiler replacement. To use these effectively you need to check how many months you get interest free and how much you therefore need to pay off each month to clear your debt.
For instance, if you needed to spend £1,000 and had a 20-month interest-free period, monthly payments of £50 would clear what you owe before the offer ran out. Be warned, if you haven’t paid off in full by the end of the offer period you’ll be switched to a much higher rate.
One other benefit of credit card use is that when used correctly they can help you build your credit rating. If you pay off your credit each month and only use a small proportion of your credit limit, you show your lenders that you can borrow responsibly, which means you’re more likely to get good deals on other products such as mortgages and loans.
You may also be able to use a balance transfer card to tackle other debts more effectively. This allows you to transfer money owed to one card, giving you a 0% period. During this time, you will be able to make sure that all your money is actually paying off your debt rather than interest.
Shop around carefully, as different cards offer different periods, and some will charge a percentage fee of the total amount you want to transfer.
While credit cards can be a cost-effective way to spend money, there are risks involved.
One major concern is if you miss a payment, it can badly impact your credit rating. This in turn can make it harder to get new credit. That’s why it’s really important to set up a direct debit to pay at least the minimum every single month without fail.
Only making minimum payments can be risky too as you’ll usually be stung with high interest rates on the remainder. If you have a 0% card, making the minimum is fine so long as you clear the balance by the end of the offer, but most other cards may charge you interest rates of around 24%. Even if you do have a 0% card you could be hit when the deal ends.
The biggest risk with credit cards is that you can get caught in spiralling debts if you can’t afford to pay back what you’ve borrowed. Some people end up taking on more debt to try and pay off what they already owe.
Others find that rising interest rates means that their debt is escalating each month. Some end up in a situation where they can’t even afford to pay the interest each month, let alone clear any of the owed amount.
Credit cards will often charge extra fees if you go over your credit limit, as well as cancelling any 0% offers, which can escalate debt and worsen the situation. If you are worried that your debt is out of control, you can contact a charity such as StepChange for help.
Other credit card issues can include charges or fees for other things such as using a cash machine or spending abroad.
Finding the best card for your situation depends on what you need it for. If you’re looking to spread the cost of a big purchase, you should go for a 0% card with the longest offer period you can find.
At the time of writing, the best deal is a Tesco Bank card, which offers up to 23 months at 0%.
If you want to consolidate debts, then a balance transfer card is the right one for you. If you’ve got a big amount of debt, you probably want the longest 0% offer with a low fee for transferring.
The longest 0% period on money.co.uk’s comparison tables is currently 29 months with Sainsbury’s credit card – which charges a 2% fee. However, you can also get fee-free options, which will be cheaper overall if you can pay them off before the deal expires. HSBC has a card that offers 0% for up to 20 months and has no fee.
If you can’t get a 0% rate card, you’ll want the lowest rate you can find, so shop around. Typical APRs are around 24% but some cards offer as little as 5.4%.
If you pay off your credit card each month in full, then reward cards are a great way to build points or cash. The best deals are typically Amex cards, with the Platinum Cashback everyday card topping the charts. It offers 5% cashback for the first three months (up to £100) and then 0.5% cashback up to the first £10,000 spent and 1% on anything after that. The next best card is the Amex Preferred Rewards Gold card.
However, not everywhere takes Amex, so you might want to consider other providers. You should also think about your shopping habits and how you want to spend the money. For instance, some cards offer flight programme points, while cards run by retailers will give you extra points if you spend with them.
If you’re struggling with your credit score, you could consider a credit builder card. If you spend a small amount each month and pay it off in full, you can build your score.