The Amazon Rewards Visa Card Just Got Way Better—Whether You’re A Prime Member Or Not

I’ve long thought of the Amazon Rewards Visa as something of a dark horse in the credit card rewards world: While underestimated and unflashy, it offers features that can fill significant gaps in your personal finance toolkit.

And now that card has gotten significantly better, making it (something) of a competitor with shinier (literally) and more expensive cards-even ones like Chase Sapphire Preferred®.

The New Amazon Prime Visa gives users 5 percent back

There are now technically two different Amazon Visa cards. There’s the Amazon Visa Rewards Signature Card, which is the old card in a slightly new form, and the Amazon Prime Rewards Visa Signature Card, which is for card members with an Amazon Prime account.

As announced last week, the Amazon Prime Rewards Visa Signature now gives members with an eligible Prime account 5 percent back on every purchase at Amazon. For those card members without a Prime account, the rewards rate remains at 3 percent.

The real perks, however, are the non-Amazon rewards

For me, the advantages of the Amazon Visa have never really been about shopping at Amazon itself. It’s the less talked about rewards that I value the most-namely, 2 percent back at restaurants, drug stores, and gas stations all year long. (Until June, you can also get 2 percent back at office supplies store, but the benefit is being phased out. If you buy a lot of office supplies, you should perhaps consider the Chase Ink Business Cash, which gives you 5 percent back on office supplies stores-and some other stuff-up to $25,000 a year, and 2 percent back on restaurants and gas stations.)

For people carrying Chase Freedom or Discover it®, the Amazon Visa can serve as a stand-in during those off months when restaurant or fuel purchases aren’t eligible for that sweet 5 percent bonus.

By using the Amazon Visa, which gives you 2 percent back, instead of Chase Freedom or Discover it®, which only offer 1 percent back on off quarters, you can up your overall annual rewards rate for gas or groceries from 2 percent (if using Chase Freedom or Discover it for all purchases all year) to 2.75 percent.

Say goodbye (or bid adieu) to paying more for foreign transactions

In addition to the increased reward rates for Amazon, card members-whether Prime members or not-will also now have access to a card with no foreign transactions fees.

Foreign transaction fees are like a tax on purchases you make while abroad, adding additional costs onto an already expensive enterprise like foreign travel. If you don’t travel, it will make it cheaper to buy stuff from foreign retailers-like, say, amazon.co.uk.

Why is this a big deal? Because the refreshed Amazon Visa is one of the few no-annual-fee cards to also not charge for foreign transactions. The only other card we know of that does this is the BankAmericard Travel Rewards® Credit Card, which also gives you 1.5 points for every dollar you spend.

For non-travel-hackers, this card is a nice alternative to Chase Sapphire Preferred®, which offers 2 percent back on travel and dining and no foreign transaction fees, but has an annual fee of $95.

With Amazon Visa, you get the no foreign transaction fees and 2 percent back on dining, all without an annual fee.

The Amazon Visa isn’t perfect

That’s not to say that the Visa is perfect. It’s got its downsides. Namely, while issued by Chase, it isn’t part of Chase Ultimate Rewards, so you couldn’t use your points toward discounted travel like you can with a lot of other Chase cards, like Chase Freedom, Chase Freedom Unlimited, Chase Sapphire Preferred®, or Chase Ink Business Cash. You also can’t boost your reward rates by using the card at online retailers listed on Shop Through Chase.

Instead, you can get gift cards, cash back (either as a statement credit or deposited directly into your checking or savings account), or travel booked through Chase (but not through Ultimate Rewards, and it seems you have to call someone).

Unlike Chase Sapphire Preferred® or other cards, it also doesn’t have a sweet sign-up bonus. As a new customer, you’ll receive a wither a $50 or $70 Amazon gift card, which is basically the equivalent of company scrip.

Its interest rates are also pretty high, so it’s also not for someone who plans on carrying a balance.

Be wary of getting locked in to Amazon’s ecosystem

Why is Amazon doing this? For the same reason Amazon does most things-to get you to spend more time and money there, and to get you into the habit of only shopping at Amazon.

For example, now that having Amazon Prime means not only access to streaming media and free shipping, but also a built-in 5 percent discount on every purchase, are you likely to cancel it? And if you’ve got Amazon Prime, you’ll want to get the most out of it, meaning you’ll be more likely to go to Amazon than another online retailer, or to a brick-and-mortar store down the road. Oh, and once you’ve earned those points, where’s the easiest place to spend them? Amazon. With all these incentives, it might not even matter if Amazon’s prices start to go up. After all, what’s a few bucks to 5 percent back and free two-day shipping?

Rewards programs are intended to create loyalty-or habit, which is basically the same thing. By making higher rewards contingent on both Prime membership and the Amazon Visa, Amazon makes it more likely for people to get both. If you’ve already got Prime, the thinking goes, you might as well get the Visa. If you’ve already got the Visa, then Prime just got more appealing.

The details

Amazon Visa Rewards Signature Card

  • No annual fee
  • No foreign transaction fees
  • 3 percent back on Amazon purchases, 2 percent back on restaurants, gas stations, and drug stores, 1 percent back on everything else

Amazon Prime Rewards Visa Signature Card

  • No annual fee
  • No foreign transaction fees
  • 5 percent back on Amazon purchases, 2 percent back on restaurants, gas stations, and drug stores, 1 percent back on everything else

Summary

If you’re not already a big Amazon shopper, then don’t let this card turn you into one. I use my Amazon Visa at Amazon, but I use it more often at restaurants and drug stores.

The key is to find a card that fits your life, rather than changing your life to fit your card.