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Amazon Mastercard Canada Details/Review: Is this the triumphant return?

Amazon is finally relaunching its credit card in Canada, this time with MBNA rather than Chase. MBNA is a division of TD Canada Trust, but has its own line of credit cards and banking products, similar to the relationship between Tangerine and its owner, Scotiabank.

This time, the Amazon credit card is being run by a Canadian company within Canada, so can we expect to see a better card with more longevity? Let’s take a look at the recently released details of the new Amazon credit card and see if it’s worth it.

 

No Annual Fee

One big hook that Amazon is trying to push is its no annual fee. Combined with a high earn rate of 2.5% on Amazon (and Amazon-owned company Whole Foods), and foreign currency transactions, and 1% back on everything else, this surely must be one of the best cashback credit cards in Canada, right?

Well, no. Because one “Gotcha!” is that, in order to get the high rate of 2.5% back, you must be an Amazon Prime member. An annual Amazon Prime membership is $89.27 (after taxes in Ontario), which makes this annual fee only slightly cheaper than other credit cards, like the American Express Simply Cash Preferred.

And while the 2.5% back on Amazon purchases is impressive, especially because you can buy basically anything and everything on Amazon, it offers a paltry 1% back on everything else, regardless if you have an active Prime subscription or not.

Free cards like the Rogers Platinum Mastercard or American Express Simply Cash offer better rewards on all purchases (Amazon purchases excluded).

 

2.5% Back on Amazon Purchases

Amazon’s merchant code is not one that typically lets you earn accelerated rewards on purchases. That means that the Amazon card is one of the only credit cards in Canada that give bonus rewards for shopping on Amazon.

While I’m not a fan of stores pushing their own credit cards for use in their stores, you can’t deny that an effective 2.5% discount on nearly anything you want is excellent. Before this card, the max cashback you could get for Amazon was 2% from cards like the Simply Cash Preferred that offered 2% back on everything. 2.5% is even better, of course.

Not only is it really good for Prime members making Amazon purchases, even if you don’t have a Prime subscription, getting 1.5% back on a free card is still pretty good – so long as you don’t mind doing your shopping on Amazon. Free credit cards never get that much back for “other” purchases, with only one exception.

The Roger’s World Elite Mastercard has no annual fee and earns 1.75% back on everything – including Amazon purchases. However, you need a household income of $80,000 just to apply for the credit card.

 

Limited Insurance

This is technically a free card, even though you need an Amazon Prime subscription to get the most value, so the insurance is pretty awful.

You get 90 days of price assurance (if the price drops, you can apply for a partial reimbursement), extended warranty, and, strangely, trip interruption insurance.

But since you only get 1% back on purchases not from Amazon, and Amazon doesn’t offer plane tickets (yet), it’s unlikely you’d even get the chance to use the insurance unless this was your only credit card. In order for a trip to be eligible for insurance, you have to make most or all of your travel related purchases on that credit card.

The 90 days price assurance and extended warranty are handy but by no means unique.

 

Rewards are more Amazon credit

When you reach 2,000 points (which you would get after spending $800 on Amazon) you get an automatic $20 credit to your Amazon account. You do NOT get cash.

This is Amazon’s way of feeding its own ecosystem. You get 2.5% back only on Amazon purchases, which reward you with Amazon credit that you can only spend with them, so you spend some more money on Amazon.

If you do a lot of shopping on Amazon, then this is amazing, as no other card will reward you this much for Amazon purchases.

For basically anything else, it’s subpar.

 

2.5% back on foreign currency purchases

Hey, this looks similar to the old Amazon card with had no foreign transaction fee, right? Well, no, not really.

The old card didn’t charge a foreign transaction fee, but you would still earn the normal amount of rewards. With this card, the 2.5% you earn is immediately canceled out by the 2.5% foreign transaction fee that they charge, meaning you get 0%.

This is technically better than most credit cards in Canada, since nearly all of them charge 2.5% on foreign currency transactions, but it’s far from the best no-forex credit card in Canada.

What’s worse, if you return anything purchased in a foreign currency, you have to pay 2.5% again to convert Canadian dollars back into the target currency. You also lose the 2.5% you earned when you return an item. You’ll end up paying 5% of the price of something that you don’t even have anymore!

 

Should this be your main card?

By no means should this be your only credit card, or even the one that you spend the most on. The fact that the rewards are only 1% back at non-Amazon stores severely limits this card’s general usefulness.

If you already have an Amazon Prime membership, it could be worth looking into this card for the simple reason that it possible to have the Prime membership pay for itself. At 2.5% back, you would need to spend an average of $300 per month on Amazon to get a “free” Prime membership. If you already spend that much, it’s a pretty painless way to save yourself $90 a year.

Keep in mind that this also counts if you have an Amazon Prime for Students membership, which only costs $39 per year. The card then pays for itself after spending $1,762 a year, or $147 a month.

If you don’t have Prime, and have no plans to get it, then even the 1.5% back on Amazon purchases probably isn’t enough to sway you to this card. You can get 1.25% back on everything with the Rogers Platinum Mastercard or American Express Simply Cash, which will work out to more rewards in the long run if you spend any money at all on non-Amazon purchases.

The niche for this card is very small.

 

What if I bought most of my groceries from Amazon?

You can buy a lot of dry goods off Amazon, including cereals, spices, and even diapers and toilet paper. Normally, those purchases would be covered under the “Grocery” category of your credit card, which, for free cards, max out at 2% - grocery is the most common 2% cashback category for no-annual-fee cards.

It’s feasible to funnel more spending to Amazon if you don’t spend much time there already, which would boost your effective cashback (as you’re spending more at Amazon). It’s probably relatively pain-free to buy more dry goods from Amazon, depending on your building type and whether you can easily get deliveries even if you’re not home.

While this strategy rewards you well if you’re already an Amazon Prime member, the fact that you can still get better rewards elsewhere with free cards lowers the value of this one.

 

Should I get this card?

I can only recommend this card if you already spend an average of $300 per month on Amazon, or if you need a starter credit card to build your credit. Check your credit card statements to see how much you spend on Amazon on average.

It’s still possible to get increased cashback on Amazon purchases without this card by simply buying Amazon gift cards from grocery stores. All purchases made from grocery stores are coded as groceries, not just food items, meaning you can get up to 2% back on free cards or up to 5% back on premium cards.

Because of the ease of working around the limitations of other cards when buying on Amazon, this card just doesn’t impress me much.


Chris Chris 06/20/2019
Canadian personal finance buff and all-around writing enthusiast, Chris loves breaking down complicated money ideas to show that they're really not so complex. 
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