Amazon offers credit card to help people build their credit score
Amazon is now offering a credit card for its customers with poor or bad credit, allowing them to “improve your credit while saving on interest or pocketing an attractive cash back return”.
The online retailer has partnered with public bank Synchrony Financial to launch the “Amazon Credit Builder” card.
This is specifically designed to target shoppers with poor credit history, who would otherwise not be eligible for its loyalty cards.
Its card will have the same perks as the Amazon Store card, which is also handled by Synchrony, including five per cent cash back on all purchases.
To mitigate the risk, Amazon said it requires a refundable security deposit of between $100 and $1000, which will also determine the credit limit.
Though its interest rate is 28.24 per cent, the programme will give users hints on how to build their credit rating and once they have demonstrated that they can reliably pay back the loans, they can move up to a standard Amazon credit card.
One they have “graduated”, they will be given unsecured credit, meaning they will be given an allowance that is not part of their initial deposit.
“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,” Synchrony’s executive vice president Tom Quindlen told CNBC.
“It’s a new segment of the market… It’s putting credit in the hands of people in a responsible way.”