Like other online retail cards, but unlike most, the Amazon Gift Card can only be redeemed for Amazon purchases, making it a “closed-loop” card. Many card experts were surprised by the structure of this new credit card offering. Here are some of their thoughts.
Like all other merchants, Amazon wants to make its transactions as efficient as possible. This means that the card offers can only be used when one makes an actual purchase from Amazon, which means that when an item is sold, there is typically a small transaction fee associated with it. Many credit card providers offer no fees at all to cardholders.
Because of the fees, many shoppers have no choice but to use their credit cards on their shopping transactions unless they also make payments via other payment processing methods. Amazon has chosen this method in order to get a lower rate of transaction fees and to maximize the benefits to Amazon. While this is good for consumers, cardholders are not always able to pay off a charge card bill online. This may limit their ability to do business with Amazon directly.
Because the card can only be redeemed for an item purchased from the Amazon website, those customers that purchase items at Amazon stores are limited to those items only. The cards themselves may not be accepted at other retailers or when shopping at online auctions or at any merchant that accepts debit cards.
The Amazon Gift Card is designed to help Amazon compete for customers, but because the company does not have a brick-and-mortar presence, it cannot offer customers the same benefit as a major retailer can. Many consumers may feel that this limitation stifles the ability of the card to serve as an effective incentive to shop at Amazon, but it could actually help the company.
Those who are familiar with a traditional retail card will find the Amazon Gift Card much easier to understand. Those who are not familiar with this type of card should research it before deciding whether it is right for them.
Consumers can choose the interest rate and the amount of credit card available on their card. If they decide to increase . . . . . . the amount of credit available, they will find that the card is a little harder to earn rewards from.
Because the card is only valid on purchases, not monthly payments, it can be used to purchase items that are already in stock at retail outlets. If you purchase these items while the card is still good, you may find that you are charged a low interest rate.
This Amazon Credit Card is not available in all areas or to every customer. Most cardholders will be able to redeem the card in one of two ways: by purchasing an item, or by making a pre-approved payment in a paper form. The payment can be mailed directly to the Amazon address or picked up at an office location.