Amazon’s store card gives 5% back

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Amazon has added a feature to its store credit card that lets Prime subscribers earn 5 percent cash back on all their purchases.

Why should you care?

Most competitive rewards credit cards offer 1 percent back on all purchases and then 2 to 3 percent back on a special category (like travel or restaurant spending.) Cards that offer 5 percent cash back typically tie that big bonus to rotating categories, meaning you earn rewards only on a certain type of purchase (like restaurant, gas or groceries) within a specified time frame and usually up to a limited dollar amount.

So, unlimited 5 percent cash back — which Amazon provides via monthly statement credits — is actually a pretty big deal as far as rewards go, even on a store card that can only be used at one retailer.

Why is Amazon doing this?

The online retailer says it’s always looking for ways to reward customers and help them save, but there are a few additional reasons why it may have quietly launched the perk back in March. First, it’s a great incentive to join Amazon Prime, a service that offers free two-day shipping, TV, music and movie streaming, among other things, for $99 a year. It’s also a great incentive to simply shop more on Amazon with its store credit card particularly, since you’ll get extra rewards back on those dollars.

Finally, Amazon may be trying to compete with Target, which also has a store card that offers 5 percent back on all purchases and free shipping from

Should I get the card?

Well, that depends. First and foremost, are you a Prime member and, more importantly, do you shop frequently on Amazon? If the answer to those questions is “yes,” then you still need to consider whether you tend to carry a balance. Rewards cards really only benefit cardholders when they pay their balances in full and don’t lose rewards to fees or interest.

This caveat is even more applicable here since the Amazon store card carries a high variable purchase annual percentage rate, or APR, of 25.99 percent. (For comparison purposes, the average APR on variable rate credit cards as of July 22 was 15.75 percent.) There is no annual fee tied to the card, outside of what you pay for your Prime membership.

Finally, can your credit score handle a hit? Credit card applications generate a hard inquiry on your credit report, which, in turn, can ding your score a few points. Check your credit for free at myBankrate to find out if you can afford a new inquiry.

Do you think the Amazon Prime store card is a good deal? Let us know in the comments below!

Follow me on Twitter: @JeanineSko.

Stay up-to-date with the industry’s top news and strategies for earning cash back. Check out Bankrate’s cash back catalog for everything you need to know to earn the most out of every swipe.