How Amazon Financing Works

In 2015, Amazon.com (AMZN) began offering its customers limited interest-free financing set up on a three-tier price level. Financing in 2018 is accessed by using Amazon’s Rewards Visa credit card or the Amazon.com Store Card. The Amazon’s Rewards Visa credit card is available to any registered Amazon.com customer. Meanwhile, the Amazon.com Store Card has no annual membership fee and provides 5% cash back at Amazon.com. Both cards are issued and managed by Chase Bank.

The Amazon store credit cards operate like other retail store cards. Applicants receive a credit limit based on their credit score and other screening factors, and the cards can only be used for purchases made at Amazon.com.

Because Amazon customers often purchase fairly expensive items through Amazon.com, the store card is a popular addition to Amazon’s products and services. The company benefits by attracting more customers to sign up for Prime membership and by paying lower interchange transaction processing fees than it pays on purchases made with a major credit card.

Financing is available on purchases made at Amazon.com.

• 6-month special financing on purchases of $149 or more
• 12-month special financing on purchases of $599 or more
• 24-month special financing is available on select Amazon-sold items

The first tier of financing offers six months’ special financing and no interest if paid in full within 6, 12 or 24 months as applicable. However, if the purchase amount is not paid in full within the specified time frame, interest is charged on the total original purchase price, even if the customer has already paid part of the balance through making the required minimum monthly payments.

Amazon store credit cards may be used to purchase items outside of the designated promotional financing item categories and price levels. On such purchases, the card’s regular interest rate charges apply. The one exception to this policy that still offers interest-free financing is the 12-month equal pay offer. This offer applies only to designated, qualifying purchases. With the equal pay offer, instead of paying the minimum monthly payment on the card’s outstanding balance, customers elect to make 12 equal monthly payments that add up to the total amount financed. Customers are only eligible for the 12-month equal pay plan if they make no other charges to their card until the 12-month equal pay offer balance is paid in full.

Any registered Amazon.com customer may apply for the standard Amazon Store Card, while only Amazon Prime members may apply for the Amazon Prime Store Card, which offers the additional benefit of 5% cash back on purchases. Prime members who spend approximately $200 a month or more at Amazon can essentially recover the $119 Prime membership fee through the 5% cash back rewards earned. Both cards report to major credit bureaus and can, therefore, affect a cardholder's credit score.

Any balance carried on orders that do not offer special promotional financing incurs a variable interest rate charge, pegged at 27.49%, as of October 2018. Because of this high annual percentage rate (APR), using the card is not considered a good choice for customers who regularly carry an outstanding balance.

Amazon customers can apply for a regular credit card that can be used for purchases anywhere Visa credit cards are accepted. This card is the Amazon.com Rewards Visa Card, issued by JPMorgan Chase & Co. (NYSE: JPM). Cardholders earn cash back on purchases made with the card.

Rewards are earned at the rate of 3% back on purchases made at Amazon.com, 2% back on purchases made at drug stores, restaurants and gas stations, and 1% back on all other purchases made with the card. Rewards do not expire as long as a cardholder maintains their account.