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TPG reader Matt sent me a message on Facebook to ask about earning rewards for Amazon purchases:
“What do you think of the Amazon branded Visa from Chase. I know I can use the points for cash back and travel; is that a good option?”
There are a lot of cash-back credit cards out there, offering a variety of bonus categories and other benefits. Some of them earn a simple percentage return on spending, while others earn points that you can also transfer to airline and hotel partners. I don’t consider Chase’s co-branded Amazon card to be one of the top cash-back options, but I’ve been getting a lot of questions about it, so I thought I should explain why.
The Amazon.com Rewards Visa Card earns 3 points per dollar at Amazon; 2 points per dollar at restaurants, gas stations and drugstores; and 1 point per dollar elsewhere. You can redeem points for 1 cent apiece toward Amazon purchases, travel or statement credits, so it functions only as a cash back card with no transfer options. Those bonus categories aren’t bad for a card with no annual fee, but you can do better.
For starters, there are plenty of cards that offer 2 points per dollar (or more) at restaurants, gas stations and drugstores, so the Amazon Rewards card is nothing special for spending in those categories. The real attraction is the 3% return on Amazon purchases, which is even more notable for the fact that it’s uncapped. However, unless you’re spending thousands upon thousands of dollars at Amazon each year, even that 3% return can be beat.
One easy example is the Discover it Card, which earns 5% back on up to $1,500 of purchases in rotating quarterly categories, and 1% back on all other purchases. Amazon.com is actually featured in both the Q3 and Q4 bonuses for 2016, so you could earn 5% cash back on up to $3,000 of Amazon purchases from July through December this year. Even when Amazon isn’t specifically included, you may be able to capitalize on other bonus categories (like grocery stores or gas stations) by purchasing Amazon gift cards from eligible retailers.
Even better, Discover matches your cash back earned at the end of your first year as a cardmember. That means you could effectively be earning 10% back on Amazon purchases for up to 12 months. While those quarterly bonuses are capped, you’d have to be spending a lot for the unlimited 3% on the Amazon.com Rewards card to win out.
Chase Freedom is another good option — Amazon has been included as one of the quarterly 5x bonus categories for the past four years, and there was even an opportunity to earn 10 points per dollar during the holiday season in 2015. Those points have the potential to be more lucrative than normal cash back, since they can also be transferred to travel partners if you have a premium Ultimate Rewards card. Chase hasn’t announced whether Amazon will be included in the Q4 holiday shopping category, but I think it’s a good bet.
Given those opportunities to earn 5% back (or more), I don’t think the Amazon.com Rewards Card is the best way to maximize Amazon purchases. If you do spend heavily at Amazon, you could consider the co-branded card as a way to improve your return once the bonuses on those other cards have been maxed out. Otherwise, I’d pass.
It's a stellar Cash Back card on its own, but when paired with the Chase Sapphire Reserve or Chase Sapphire Preferred, the Freedom's 5x Category Bonuses let you rack up Chase Ultimate Rewards Points, transferrable to partners or redeemable via the portal.