by Matt Frankel, CFP | Jan. 3, 2019
Amazon and American Express recently announced a partnership to create two new business credit card products, with a particular focus on solving major small business pain points -- specifically the amount of time that passes between when a business receives an order or produces a product and when they actually get paid. Here's a rundown of the new Amazon American Express cards, and why they could be extremely appealing to small business customers.
The Amazon Business American Express Card comes in two varieties -- one for Amazon Prime customers and one for non-Prime customers.
The Business Prime variety offers cardmembers the choice between 5% back in rewards or 90-day interest-free repayment terms on Amazon-company purchases, including AWS and Whole Foods. The non-Prime version offers customers a choice, but with slightly-reduced benefits of 3% back or 60-day interest-free repayment terms.
Both versions of the card have no annual fee. And, the rewards aren't just for Amazon purchases. Both versions of the card offer 2% back at U.S. restaurants and gas stations, as well as wireless phone services, and 1% back on all other purchases.
Competition in the credit card industry has never been higher than it is right now, and you may have noticed this reflected in the ever-increasing 0% intro APR offers, sign-on bonuses, and high rewards rates on the market. Instead of trying to one-up the competition yet again, Amazon and American Express are trying to do things better than other business credit card issuers by using a unique perk to solve a major pain point for small businesses.
I'm talking about the extended repayment terms of 90 days for Prime members and 60 days for non-Prime members.
Here's why this is such a big deal. Other credit cards have 0% APR financing offers. There are even 0% intro APR offers of up to 21 billing cycles on the market right now. However, the Amazon Business American Express Card doesn't just offer 0% interest for the 60- or 90-day period -- cardmembers don't need to make any payments whatsoever during that time. On the other hand, when you take advantage of 0% intro APR offers elsewhere, you still have to make monthly payments. And it's also worth pointing out that this is a permanent benefit of the new cards -- not just an introductory one.
Consider this hypothetical scenario. You operate a small business and get a $10,000 order for your product. You spend $3,000 on raw materials, $500 on shipping costs, and $500 on other various expenses. Producing the product takes about three weeks, and when you ship it, your customer has 30 days to pay you. Meanwhile, the $4,000 you charged to your business credit card is due within a month, or else interest starts accumulating.
The Amazon Business American Express cards are designed to help small businesses deal with common cash flow issues like this.
While there are other business rewards and cash-back credit cards that offer a 5% rate on certain purchases, the ability to get this high rewards rate on the broad range of products and services offered by Amazon's businesses is above and beyond the competition. And, as discussed earlier, the ability to make purchases and pay absolutely nothing for 90 days is a unique perk that other business credit cards simply don't match.
To sum it up, this card could be appealing to all small businesses with purchasing needs. Businesses without cash flow concerns could get a top-notch reward rate, and businesses that do worry about cash flow can take three times the amount of time to make a payment as a standard credit card. And, they can do this with no annual fee.
As I mentioned, competition in the credit card industry is intense, so it's impossible to declare any untested credit card product a home run. Having said that, the new Amazon Business American Express Cards certainly have the potential to gain serious traction right away.
As long as you pay them off each month, credit cards are a no-brainer for savvy Americans. They protect against fraud far better than debit cards, help raise your credit score, and can put hundreds (or thousands!) of dollars in rewards back in your pocket each year.
But with so many cards out there, you need to choose wisely. This top-rated card offers the ability to pay 0% interest on purchases into 2022, has some of the most generous cash back rewards we’ve ever seen (up to 5%!), and somehow still sports a $0 annual fee.
That’s why our expert – who has reviewed hundreds of cards – signed up for this one personally. Click here to get free access to our expert’s top pick.
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