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Amazon has launched a credit card where you can earn up to 2% cashback on spending – is it worth it?
Plus, we've explained how to find the best credit card for you
AMAZON has launched a brand new credit card and shoppers can earn up to 2% in cashback.
It comes over a year after the online retail giant scrapped its Amazon Classic and Platinum Mastercards back in January 2023.
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But Amazon has now partnered with Barclays to launch its new brand new Visa credit card.
Experts have dubbed the Amazon Barclaycard a "solid addition" to the market, but others have warned borrowers to think carefully before they apply.
The credit card promises to reward loyal customers with many cashback benefits.
It comes with no annual fee and a six-month interest-free introductory period.
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Plus, new customers will receive a free £20 Amazon gift card upon application approval.
Once approved, shoppers can earn up to 2% cashback on their purchases at Amazon.co.uk and at other retailers.
John Boumphrey, Amazon UK Country Manager, said: "We're excited to introduce the Amazon Barclaycard – designed to offer cardmembers ways to earn rewards for their Amazon purchases and every day activities with no annual fee."
Steve Weston, head of everyday money management at Barclays, added: "The card is powered by Visa, and will therefore be accepted by millions of merchants worldwide, as well as benefit from Visa's state-of-the-art fraud prevention capabilities and its Zero Liability Policy."
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However, while the card may look great on paper, it won't be the best option for everyone.
HOW IT WORKS
Unlike other cashback credit cards, any rewards earned on Amazon's card must be redeemed into an Amazon gift card to become spendable.
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When you shop using your Amazon Barclaycard, you can get the following:
- 1% rewards on all Amazon purchases
- 0.5% rewards on everyday spending outside Amazon for the first 12 months (0.25% thereafter)
- 2% back from all Amazon spending during designated shopping events for Amazon Prime members, including Cyber Monday, Black Friday, and Prime Day
Once you've earned £5 in rewards, you can transfer a £5 Amazon Gift Card to your Amazon account.
Alastair Douglas, chief executive of TotallyMoney said: "Amazon's new Barclaycard credit card is a solid addition to the market.
"Particularly for Amazon shoppers and Prime members.
"While the card offers up to 2% back on Amazon purchases and 0.5% elsewhere, this is delivered as gift cards, which is not as useful as traditional cashback."
For those who are more interested in getting cashback on all their purchases, there are better options out there.
HOW DOES IT COMPARE?
With Amazon's Barclaycard, you only get up to 0.5% back on all non-Amazon spending within the first 12 months.
This then drops to 0.25% after this period.
Alastair added: "Consider Amazon Barclaycard if you're a heavy Amazon spender, particularly a Prime member.
"It could be a worthwhile addition to your wallet.
"However, always compare it with other options and ensure it fits your spending habits before applying."
Chase's fee-free current account offers a debit card, which allows for 1% cashback on most spending, and shoppers can earn a maximum of £15 each month.
American Express (Amex) offers two cashback credit cards.
The fee-free Amex Cashback Everyday Credit Card pays newbies 5% cashback on all spending up to £125 during the first five months of card membership.
After this period customers will continue to earn 0.5% on all spending up to £10,000 and then 1% on all spend above this.
However, to take advantage of any of these cashback offers, you'll need to spend at least £3,000 on the card each year.
The Amex Cashback credit card, which costs £25 a year, offers similar perks but without the minimum annual spend.
Customers are rewarded with 5% back on purchases within the first three months, then 0.75% on the first £10,000 spent and 1.25% on all spending above this.
Existing Santander customers can get ongoing 2% cashback on their spending with the Santander Edge credit card.
This comes with a £3 a month fee but gives customers 2% back on most purchases in the first 12 months and then 1% cashback thereafter up to a maximum of £15 a month.
However, if you're still interested in the new Amazon Barclaycard, it's worth considering some more limitations.
CREDIT CARD NEED-TO-KNOWS
NOT using a credit card effectively can wreak havoc on your finances and your credit score.
If you don't keep up with repayments or default on your debt, you are likely to get a black mark on your credit record, which could affect your ability to get a credit card, loan or mortgage in the future.
It's important not to let yourself get sucked into overspending.
You should always clear the full balance as soon as possible.
If you have a poor credit score, don't bank on being approved for a card or getting the 0% deal you'd hoped for.
Card providers only have to give the advertised rate to 51% of applicants, so you could end up paying more interest than you bargained for.
After your 0% period is up, lenders can charge upwards of 40% interest, so if you have not repaid the debt fully by then, try to move the debt onto another 0% deal.
If you've got a poor credit record, you're less likely to get the best rates.
And if you are looking for a new credit card, don't apply for lots at once.
LIMITATIONS
It's bad news for those who regularly rely on Apply Pay.
This payment method is unavailable for the Amazon Barclaycard.
Not everyone can apply for a new credit card either.
If you already have a Barclaycard or have had one in the last six months, you won't be able to apply for the Amazon Barclaycard at the moment.
However, Barclaycard said that it will be opening applications for existing Barclaycard customers in the future.
Other experts have warned shoppers to act cautiously before applying for this credit card.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said:
"You need to be honest with yourself about whether you’re the kind of person who suits a reward card.
"After the initial six months, the card charges 28.9%.
"If you can't pay it off on time and in full, you can quickly unwind any gains you made from the cashback.
"You should only go into this for the rewards. If you have total confidence, you’ll never have to carry a balance.
Sara Williams, debt expert and founder of Debtcamel.co.uk, added: "Amazon wants you to buy more from them.
"If you only use the card for Amazon spending you would have done anyway, these small amounts of cashback are helpful even though they can only be spent at Amazon.
"But if your brain thinks "reward" when you make an Amazon purchase, you may shift more spending to Amazon, which may not be the cheapest place and you may encourage spending more than you can really afford."
So remember to always shop around instead of using a credit card's perks to encourage your spending down a single avenue.
If you're already in debt with one credit card provider, taking out a rewards credit card will not be worth your while until your previous debt is cleared.
Instead, it's worth looking for a balance transfer credit card to help pay off your existing debt.
They allow you to move the balance from other cards onto a new one, and you pay no interest for a set period.
This means your debt is easier to pay off because money saved on interest can be used to put toward owed finances.
FIND THE BEST CREDIT CARD DEALS
To assess all the available cards, visit price comparison websites like MoneySavingExpert's Cheap Credit Club or Compare the Market.
These sites allow you to tailor the perks you're looking for, whether it's cashback, air miles, or other rewards.
You should always use an eligibility calculator before applying, that's because every credit card application leaves a mark on your credit file and can affect your credit score.
Once you run your details through an eligibility calculator and you've been shown that you're likely to be accepted, make a formal application.
To do this, you will need to provide your name, address and email address as well as details of your income so a provider can assess your eligibility.
You will also need to provide details of how much money you want to transfer to the new card, but you can often do this after you have been accepted.
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If your application is approved, you will need to transfer the balances within a set period, usually around 60 or 90 days.
Your old balance will then be cleared and you can start making interest-free repayments on your new card.
How to cut the cost of your debt
IF you're in large amounts of debt it can be really worrying. Here are some tips from Citizens Advice on how you can take action.
Check your bank balance on a regular basis - knowing your spending patterns is the first step to managing your money
Work out your budget - by writing down your income and taking away your essential bills such as food and transport
If you have money left over, plan in advance what else you’ll spend or save. If you don’t, look at ways to cut your costs
Pay off more than the minimum - If you’ve got credit card debts aim to pay off more than the minimum amount on your credit card each month to bring down your bill quicker
Pay your most expensive credit card sooner - If you have more than one credit card and can’t pay them off in full each month, prioritise the most expensive card (the one with the highest interest rate)
Prioritise your debts - If you’ve got several debts and you can’t afford to pay them all it’s important to prioritise them
Your rent, mortgage, council tax and energy bills should be paid first because the consequences can be more serious if you don't pay
Get advice - If you’re struggling to pay your debts month after month it’s important you get advice as soon as possible, before they build up even further
Groups like Citizens Advice and National Debtline can help you prioritise and negotiate with your creditors to offer you more affordable repayment plans
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