
Amazon.com Credit Builder: Build credit with no annual fee - prostoalex
https://www.amazon.com/iss/credit/creditbuilder?pr=conplcc
======
dclaw
Pretty sure they're breaking the law regarding the 2009 CARD Act. It took a
search on that page for % to find the actual APR, which is 28.24% -- That was
the 26th result on the page out of 38. The first 25 being provisions regarding
their 5% back.

The APR is required to be prominently displayed so consumers can do their due
diligence on deciding on a card.

But whatever, obviously Amazon is getting into the slave credit business. Like
they care, and like anyone would bother holding them accountable.

~~~
BonesJustice
Yeah, I don't think burying it in the ninth paragraph of the Terms could be
reasonably called 'prominent'.

For that matter, the landing page for the Apple Card shoves it into a
footnote.

Seems like a case of "tech company trying to act like bank has no idea how to
comply with banking regulations".

~~~
beshrkayali
It's highly unlikely that Amazon or Apple "had no idea how to comply with
banking regulations".

~~~
supergauntlet
Both Amazon and Apple have law departments larger than most large startups. It
was intentional. They know nobody will do anything. So really, it's a case of
"tech company pretends to be incompetent at pretending to be a bank."

~~~
sharkweek
Sign up X customers and make Y dollars.

Get fined Z dollars for breaking a regulation.

If Y > Z, congratulate those responsible.

~~~
willart4food
+/\- TOO_BIG_TO_FAIL

------
Negitivefrags
Can someone explain to me why America has this strange system of “building
credit” while other countries don’t really seem to?

In my country there are agencies that track, for example, the fact that you
had a debt collector called on you, but you don’t have to have ever used
credit card to get a loan, which seems totally bizarre to me.

When I got a home loan the primary checks were about making sure my income was
as I said it was, that I had a stable job, and then they wanted bank
statements to see what my expenses were. My existing bank didn’t require
statements of course and just automatically worked out my weekly budget from
my account.

Why would banks want to trust some arbitrary gameable score when the basics
are barely more complicated to check when getting a loan?

~~~
jdietrich
A record of successfully repaying debt is highly relevant to whether you're
likely to repay your debt in future. Credit risk is only partly about
affordability; many people who can afford to reliably repay their debts still
fail to do so, for a variety of reasons.

It doesn't really matter to lenders whether you "game" the system; if you're
sufficiently organised, responsible and financially stable to take out and
repay debts solely for the purpose of improving your credit history, then
you're probably a good person to lend to. Americans tend to use a _lot_ of
consumer credit, so not having a credit card, a cellphone contract or a car
loan makes you anomalous.

I don't know what country you're in, but here in the UK "building credit" is
very much a thing; I'd be very surprised if it had no impact whatsoever on
your creditworthiness in your country.

[https://www.moneysavingexpert.com/loans/credit-rating-
credit...](https://www.moneysavingexpert.com/loans/credit-rating-credit-
score/)

~~~
stingraycharles
Don’t you think it’s bad for a society to have a system that encourages people
to get loans?

I know for the businesses, it makes perfect sense to have a credit system,
it’s just that I appreciate it’s not a thing over here: people should incur as
little debt as possible.

~~~
adrianmonk
There is bad debt and good debt.

Getting a credit card and spending up to the limit while only making the
minimum payments is bad debt. Buying a luxury car that's more expensive than
you can really afford because the car dealer talked you into it is bad debt.

On the other hand, if you need a car to get to work, getting a car loan for a
practical car is probably good debt. If you're married and about to have your
second child and need a house, a mortgage is probably good debt because you're
building equity, the house might appreciate, and anyway the alternative is
throwing away a similar amount on rent.

Point being, it is probably not best to always seek to minimize debt. There
are trade-offs to consider. Often, avoiding debt is better, but sometimes the
negatives of debt are more than outweighed by some opportunity it unlocks.

So is it bad for society? It depends on how much bad debt it encourages and
how much good debt it encourages.

~~~
lostphilosopher
Where this becomes "bad for society" is when the customer _has to_ take on
debt for the sole purpose of building a credit score. Some of us would prefer
not to utilize debt at all, but if we want to (for example) rent an apartment
we may be _required_ to have a credit score. Even if we offer to pay the full
term's rent up front. Source: Experience.

~~~
dwild
> rent an apartment we may be _required_ to have a credit score. Even if we
> offer to pay the full term's rent up front.

Well to be fair, offering the full term rent up front to avoid a credit check
seems sketchy as hell. Did you still let him do a credit check? He could have
use this to verify your identity. I know a virtual bank in Canada that use
them for that (if you refuse, they simply ask you to go do an identity check
in a Canada Post).

~~~
jlokier
Well, what are you supposed to do if you would fail the credit check (but pass
the identity check)?

Live nowhere?

Because if you won't pass the credit check for one property agency, you won't
pass for any of them.

I've been in that situation. I had to pay 14 months rent up front. Crazy thing
is I had the money and could pay it fine, but I couldn't pass a credit check
to pay exactly the same amount monthly.

Actually the crazier thing is they required 12 months rent up front again, for
the second year. You'd think by then I'd have a track record of paying rent.

All because paying rent for many years does not count towards credit rating,
even though it's highly regular and the single largest outgoing for most
people. (Paying mortgage does count. Annoying.)

~~~
dwild
I have an hard time understanding your point.

Sure I agree that paying rent should count towards credit rating, but that's
not an argument against credit rating.

A bad credit rating means that it's a bad idea giving you a unsecured loan...
that's all. An apartment is sadly pretty close to a loan, even more so with
all the renter protection you get out of it.

Paying the full rent in theses cases make sense then.

My point is that in the lostphilosopher case, it was maybe simply used as an
identity check, making sure it wasn't from a criminal. The resulting credit
score wouldn't matter because of the full rent.

> You'd think by then I'd have a track record of paying rent.

Well, if they feel safer that way, again make sense. Why won't you personally
give me a loan? The same apply to that case.

~~~
jlokier
> An apartment is sadly pretty close to a loan, even more so with all the
> renter protection you get out of it.

A place to live is also a basic life necessity.

Something is very wrong in a society where a "bad credit rating", which can
arise from many things (some of them having nothing to do with credit - agency
malpractice comes to mind), threatens homelessness _even when you can afford
to rent_.

------
ohhhwell
Protip for anyone considering moving to the US. Make sure you open an Amex
card in your current country at least 3 months before moving. Amex has a
system where as a customer from another region they will let you open one card
without needing US credit rating! Make sure you pick a card that doesn't have
an annual fee as your first card, since a component of most credit scores is
the age of your oldest card, so you want to keep this card open forever, so a
fee would suck.

I'm approaching 2 years in the us and this has been quite helpful, however I'm
still in the situation someone else mentioned. My credit score is high, but I
have gotten rejections from "not long enough history" (chase)

But getting an Amex platinum after the fact was no problem to get in on the
whole Airport Lounges US credit card thing.

~~~
tareqak
AFAIK, if:

1\. You have had an account with the Canadian RBC Royal Bank 2\. You move to a
state in the US where the US RBC Bank operates in

or

1\. You have had an account with the Canadian TD Bank 2\. You move to a state
in the US where the US TD bank operates in

then, you can ask the US banks to look at your corresponding Canadian bank's
credit history in making a decision in approving you for one of the US bank's
credit cards (YMMV - your mileage may vary).

------
Someone1234
This is legitimately a useful service for those who need it. The status quo
has created a unintended "chicken & egg" problem wherein people need ok credit
in order to start building good credit.

This acts as an escape hatch allowing people to build up their bad credit up
to a point where they'd qualify for normal credit cards.

~~~
lemcoe9
There are already dozens of secured credit cards for the credit-challenged:
[https://www.creditcards.com/secured/](https://www.creditcards.com/secured/)

The 5% back on Amazon.com purchases would give a slight edge to this new
secured card.

~~~
deadmik3
5% back on only Amazon with a $120 annual fee (prime) is not very good.

~~~
entropea
Plus 28% APR, though I can't imagine holding a balance on a secured card.

~~~
fjsolwmv
Secured cards are held by irresponsible people who carry balances. Otherwise
they would get unsecured cards.

~~~
entropea
Holding a balance does not mean you're irresponsible, it just means you will
be paying interest.

------
teraflop
After reading through the page, I don't see what makes this different from
normal secured credit cards which have been around forever. Is it just the
Amazon branding and gift-card promo?

~~~
bongobongo
It's worse than your typical secured credit card because it locks you into
Amazon.com and services that use Amazon Pay. Basically, it's an agreement to
buy Amazon products or products through Amazon until Amazon determines that
your purchasing and payment habits reflect those of a person with good credit.

People saying that it's great because you get 5% back on Amazon purchases are
myopic. Nobody on HN would be celebrating the Starbucks Card Credit Builder
where you get a 5% discount on purchases and can build credit but can only do
so by purchasing products from Starbucks and its affiliates. Why? Because as
others have said, there are already plenty of secured Visa/Mastercard cards
out there that don't convert your capital to funnybux and lock you in to a
particular vendor and its best buddies.

~~~
caconym_
On the other hand, Starbucks really only sells one sort of thing (food) while
Amazon sells many things. Furthermore, Starbucks is a luxury, but on Amazon
you can, I think, buy many of life's necessities at competitive prices.

I agree that the motive is not necessarily pure. Furthermore I think Amazon is
a huge force opposite sustainable economics, and that the American credit
system, credit bureaus, and the symbiotic partners who encourage people to
take on debt and prey on them in that vulnerable, _owned_ state, are a
diabolical construct engineered for social control and a crime against the
American people.

But, I think the comparison with Starbucks is not quite right. This is short-
sightedly better _and_ long-sightedly worse, for a lot of the same reasons.

~~~
bongobongo
You're right that it wasn't a good analogy. More like the Wal-Mart Store Card
Credit Builder.

~~~
freetime2
A Wal-Mart Store Card Credit builder that gave 5% cash back would be a great
product for a lot of people, and just as worthy of “celebration” as this
Amazon card.

I don’t have any problems with store cards in general. I see them as a
mutually beneficial agreement between retailers and frequent customers. It
allows the retailer to capture a portion of the transaction revenue that would
normally go to a third party (and some extra data about the customer), and in
return pass on some of the savings to the customer in the form of discounts
and rewards.

~~~
bongobongo
You need Prime to get the 5%. Prime costs $119/year. You would need to spend
$2,380 or nearly $200/mo just to make it worthwhile.

Sorry; that’s not a good product at all.

~~~
tedmiston
> You need Prime to get the 5%. Prime costs $119/year.

There are loopholes to this that make Prime much cheaper though.

For example, Prime Student [1] is $6.49/month or $59/year.

The EBT subsidized Prime membership mentioned elsewhere in the thread is
$5.99/month (no annual discount).

You can also use Amazon Household [3] on an existing Prime membership to
qualify multiple people in the household as Prime members. All members get the
5% benefit, not just the card holder. I doubt this stacks on the student
version but it definitely does on vanilla Prime and likely on the subsidized
version as well.

[1]: [https://www.amazon.com/Amazon-
Student/b?node=668781011](https://www.amazon.com/Amazon-
Student/b?node=668781011)

[2]:
[https://www.amazon.com/l/16256994011](https://www.amazon.com/l/16256994011)

[3]:
[https://www.amazon.com/myh/households](https://www.amazon.com/myh/households)

------
bluedino
History repeating itself...Sears was many peoples first credit cards, they'd
give almost anyone a $300 card (which could only be used at their stores)

~~~
bongobongo
Yep. I'm really confused why this press release/advertisement for Amazon is on
the front page of Hacker News. It's not new technology; it's not even close to
being innovative. It's literally just an Amazon logo pasted onto an old idea.
This is an advertisement.

~~~
astura
HN just likes to have a discussion whenever Amazon offers a new product or
service for whatever reason.

Same with Apple or Google.

~~~
bongobongo
I’m relatively new around here but it’s a cringeworthy level of uncritical
sycophancy. (Perhaps that’s too harsh; perhaps not.)

------
dymk
> with an eligible Prime membership

So there is a fee, it's a $119/year prime membership

~~~
bluetidepro
I didn't dig into the FAQ or fine print, but I wonder what happens if you get
the card, and then your Prime membership runs out?

EDIT:

> The 5% back benefit may apply to purchases (less returns and other credits)
> made using the Amazon.com Store Card Credit Builder when signed into an
> Amazon.com account with an Eligible Amazon Prime Membership, including
> 1-Click orders and purchases made at physical Amazon locations (in each
> case, where 5% back is selected as the default option or where Promotional
> Financing is selected as the default option but is not available for the
> particular purchase).

It seems like the 5% back is only for Prime membership folks. I think anyone
can get the card, with or without Prime, though. So then it doesn't have a
yearly fee, technically.

~~~
dymk
They almost surely just close the account after some amount of time. Like any
other bank if you canceled your accounts with them.

~~~
bluetidepro
See my edit on the comment. It looks like that's only for the 5% back. There
isn't a fee technically.

------
qntty
Why do secured credit cards have an interest rate? They're charging you to
borrow money from yourself? The cost of maintaining an account should be
covered by the processing fees, right?

~~~
entropea
Nothing more than greed. It's secured, the company will never lose money on it
no matter what.

------
luckydata
It's backed by Synchrony meaning it will have impossibly shitty management
tools, can't speak to a human without spending an hour on the phone. No
thanks.

------
prepend
This is nice just for the 5% back on amazon purchases. I’ll likely set it up
just to wash through all my prime purchases.

~~~
ganoushoreilly
Just pay it off fast as that interest rate is high!

~~~
ThrustVectoring
Interest rates on credit cards don't matter if you pay off the statement
balance on or before the due date.

~~~
cmiles74
The billing statements provided by these vendors, if taken at face value,
clearly encourages the holding of a balance. Avoiding a balance is a
reasonable goal and a smart fiscal policy, but the penalties for holding a
balance, in my opinion, should not be so high.

I think a 28% APR is way high and their tiered financing strikes me as
complicated. Do they clearly describe the tiers and payments required to stay
in compliance and avoid that hefty interest rate? I bet they don't, that
certainly isn't the case with other Synchrony cards.

~~~
lotsofpulp
Every single credit card statement I’ve ever seen clearly states the balance
and payment due date before which interest will begin to accrue. Every single
one offers an option to automatically pay it every month so you don’t even
have to do anything, other than not spend more than the cash you have in your
bank account.

~~~
entropea
>other than not spend more than the cash you have in your bank account.

So then why bother opening a credit card?

~~~
ceejayoz
Float, cash back/mileage rewards, emergencies?

Plus, if you're traveling, you _really_ don't want to put hotels or rental
cars on a debit card - they put a huge hold on your balance.

~~~
AnssiH
> Plus, if you're traveling, you really don't want to put hotels or rental
> cars on a debit card - they put a huge hold on your balance.

Isn't any hold equally large on a credit card? I've never noticed any
differences in the size of holds between credit and debit (Finnish VISA
cards).

~~~
lotsofpulp
It’s the same, but people tend to pay large bills using bank accounts (in the
US, landlords, mortgage issuers, taxes for government, insurance, utilities,
tuition, etc typically don’t accept credit cards for payment.)

So you don’t want to give someone access to your bank account unless you
absolutely have to, since they can “authorize” or “hold” funds in your account
which can cause other expenses to not get paid.

~~~
AnssiH
Makes sense.

Somewhat related, I'm guessing from this that card usage limits are not common
in US? Here almost(?) all debit/credit cards have daily limits that you can
change via web/app/call, so there can be no arbitrarily sized holds.

~~~
lotsofpulp
There probably are, but they apply to the total of all transactions, so it
wouldn’t seem useful against protecting from a single merchant using up all of
your funds/credit.

------
soulnothing
I just finished a bankruptcy a month ago. Before a tenant fiasco my credit
score was ~800. Now that I've gone through the process I'm at ~630. It's not
that bad.

But when I went to look for an apartment in NYC. I was constantly denied due
to the bankruptcy on my record. I felt the solution they offered was downright
predatory. Either a for paid guarantor. Which took 3 months rent as a non
refundable collateral, then an additional 3 months as buffer for failed rent.
That was on top of most land lords wanting 6 to 8 months rent for down
payment. Another service I saw was a guarantor insurance plan. Which tacked an
extra ~8% as an insurance fee for the first year, than 5% the next year.

The only reason I care about my score right now. Is related to putting a roof
over my head. Due to the above I went down to Philly and only had to put up
four months instead of the typical three.

To rebuild my credit I had two secured cards. One for monthly services, the
other for larger purchases. I paid them down to 10% each month. This is what
brought my score to around 630ish range.

Since being discharged. I have been receiving offers that feel predatory to
me. House loans with a consultation fee. Or auto loans with really high APR.
I've also received a number of credit rebuilding loan offers. Which have non-
refundable application fees ranging from 75$-100% with a variable APR between
24-32%.

I'm blessed to be a well paid software employee. Because once you're on the
other side of the fence. No one trusts you, and the fine print is much more
aggressive. I really feel now for people who are barely scraping by. Having to
sign these agreements just to cover a roof.

I will look at this just to rebuild my score. It may not be the best. The only
other company that approved me was Dell.

We do need a better program to help people recover. Without penalizing them
with higher APR or hidden fees. If they got into that perilous position. They
may not be on the best footing.

------
Yhippa
The only drawback I can think of for this is that it's a PLCC and not a Visa
or a Mastercard. That said it looks like it's got some neat benefits like the
5% back on Amazon purchases and promotional financing that seem to be on cards
for people with established credit.

------
sdinsn
This is called a "secured" card. Pretty much all banks offer this.

------
duxup
Makes sense as Amazon wants to get to as many people as possible and those who
can't keep a card ... might want a handy route to build credit and still use
Amazon.

------
YeahSureWhyNot
I think most banks had secured credit cards for long time. I got mine from
bank of America with 300 deposit which gave me 300 limit. they refunded it
after 6 months

------
msoad
This is perfect for immigrants who have good income but can't get approved for
any credit cards because of lack of history.

~~~
igorstellar
Immigrant here. I've got approved for $10K CC at BofA without any history,
just provided a bunch of documentation like proof of income. It's also a good
idea to apply for some credit union to loan your vehicle even you can afford
buying it for cash.

------
llsf
This would have been great when I arrived in US with zero credit history.
While I did get secured card from the bank, it took for ever to get a line of
credit of more than $500/month. The "monitor/improve your credit score"
approach is good too as it can be a very foreign concept when you come from
Europe...

------
tareqak
Here is an article with the same story from a different source:
[https://www.marketwatch.com/story/amazons-new-credit-card-
ta...](https://www.marketwatch.com/story/amazons-new-credit-card-targets-
people-with-bad-credit-2019-06-10) .

------
_bxg1
The comments here about how bad America's privatized credit system is, make me
wonder what it would take to "disrupt" that industry. I guess the hard thing
is that it's about having relationships with all these giant institutions, so
there's a strong in-group bias.

------
mcstafford
> standard variable purchase APR is 28.24%

Amazon has practically brought payday loans to scale.

~~~
brianwawok
Payday loans are often 300-600%. Or at least were in many states before
regulation was passed. See here for details state by state:

[https://paydayloaninfo.org/state-
information](https://paydayloaninfo.org/state-information)

That said, APR of 20%+ on high reward credit cards is not uncommon. I have
various cards with various APRs over 20%. I have never paid a penny of
interest on them so I don't track which APR is which.. usually the juicier the
"reward" of a card, the higher the APR. Which matters not if you fully repay.

------
40acres
There should be more was for people to build credit within our financial
system, this along with some recent efforts by the bigger institutions to
incorporate factors like utility bills are a nice step forward.

~~~
howard941
Have you read the terms for those up-your-score programs? If I were a CRA in
light of all of my issues from FCRA transgressions to gaping security holes
I'd want the entire world in mandatory arbitration for everything.

------
christefano
Looks like Amazon has figured out where to find even more Amazon.com customers
by helping improve otherwise risky consumers' credit. Even applying gives $10
— in the form of an Amazon gift card.

------
neilv
Does this tie in with recent news about local pushback against cash-free
businesses, on social-justice grounds? (Amazon cash-free stores not accessible
to poor people without credit cards.)

