American Express and Amazon partner on small-business credit card—is it worth it?

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American Express














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 and Amazon














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 are offering a new credit card for small businesses designed to alleviate some of the cash flow problems business owners can encounter.

The Amazon Business American Express Card launches Tuesday and offers special rewards for purchases made on Amazon.com, Amazon Business, Amazon Web Services and at Whole Foods. The interest rate on the card varies between the prime rate plus 10.99% and the prime rate plus 18.99%.

Key to the card’s appeal is its somewhat unusual rewards structure. Card-holders have two options for rewards on the purchases they make through these Amazon-owned businesses. They can either choose to get cash back or they can instantly qualify for an interest-free payment term.

“We designed this product for a very particular need, which is control over cash flow,” said Courtney Kelso, head of U.S. commercial card solutions at American Express.

Don’t miss: American Express plans major changes to its popular Gold Card

How the card’s benefits work

The cash-back percentage and length of the deferred interest period depends on whether or not the small business owner is an Amazon Prime Member:

  • Amazon Prime members can choose between 5% back or a 90-day interest free period
  • Non-Prime customers can choose between 3% back or a 60-day interest free period

Here’s how the benefit works: If small business owners choose the deferred interest option, they will not need to make payments on purchases for that time period (either 90 or 60 days). Only after that time has elapsed will they accrue interest on the balance from that purchase — if they do make payments during the interest-free period they will only owe interest on whatever balance (if any) is remaining at the end. The purchase can be of any size, up to the credit limit on the card.

If they choose cash back, they can either use the money earned as credit for future Amazon purchases or to reduce their statement balance.

When small business owners sign up for the card, they will choose a default option between these two for all Amazon-related transactions. However, when they make a purchase, they can choose to switch the rewards option at checkout. In other words, a business owner can choose to earn cash back by default, but opt for the deferred interest period on specific transactions instead.

American Express


The Amazon Business American Express Card will come as a metal card with a vertical design.

The card also comes with other benefits:

  • No annual fee
  • 2% back on purchases at U.S. restaurant and gas stations and on wireless telephone services purchased directly from U.S. service providers.
  • 1% back on all other eligible purchases.
  • One complimentary year of the Business Prime Essentials plan, worth $179, which provides free shipping on eligible items for up to three users on an Amazon Business account

Additionally, when card-holders makes purchases with this card through Amazon Business their statements will reflect transactional details including the name, quantity and per-item cost of all items purchased.

The card also comes with access to other small business services for American Express members, including Connect to Quickbooks, which allows businesses to sync their card statements with their accounting software, and the mobile receipt-capture tool called Spend Manager. Card holders also can request additional cards for their employees at no additional cost.

Card members will also receive an Amazon gift card — $125 if they are Prime members or $100 if they’re not — as a sign-up bonus.

Why businesses may benefit from this card

This is not the first time American Express has structured a card’s rewards in this way. The Plum Card, a charge card which American Express rolled out in 2007, similarly offered small business the choice between a cash-back reward for early payments and a 0% interest period.

That structure is designed to provide business owners with flexibility, Kelso said, which can come in handy given that small businesses can’t always rely on getting paid on a regular basis.

Take a contractor: They may need to order supplies for remodeling a room in a home, but may not get their full payment for a couple months after that purchase. “When you talk to small businesses, one of the biggest complaints is slow payers,” said Nick Clements, co-founder of personal-finance website Magnify Money














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“Just getting paid is one of the biggest challenges small businesses face, especially small proprietors.”

This card then functions as working capital for the business owner and almost functions more like a small business loan. Alternatively, when a business is flush with cash and can pay off their balance in full each month, the cash back becomes more attractive.

Also read: Half of Americans with this credit card regretted getting one

The card’s potential drawbacks

Given that the card’s main rewards only apply to Amazon-related purchases, generally businesses would only benefit if they typically shop there. “As with any co-branded card I would only recommend it to users who are really loyal to the brand,” said Amber Stubbs, managing editor at personal-finance website CardRatings.com.

Other small business cards beat this new card’s rewards, said Kimberly Palmer, credit cards expert at personal-finance website NerdWallet. Some cards offer 5% cash back on wireless telephone services; others provide 3% back on select categories.

“In terms of cash back this card is very competitive,” Palmer said. “But small businesses are very diverse and there’s not a one size fits all for them.”

If a business owner doesn’t spend a significant chunk of money in a specific category, they may be better off with a more general card such as the Capital One Smart Cash for Business card














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which offers 2% back on all purchases.

Another potential drawback: The length of the interest-free period. Other small-business cards come with longer 0% APR periods as introductory offers. If there was a single purchase that a business owner was planning to use that rewards option on with the Amazon Business American Express Card, other cards might have longer interest-free periods.

2018-10-23 13:00:14

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