Is Amazon Reload really a good deal for customers?

Colin Lalley 1600


Colin Lalley

Colin Lalley

Associate Content Director, Home & Auto Insurance

Colin Lalley is the associate content director of home and auto insurance at Policygenius, where he leads our property & casualty editorial teams. His insights have been featured in Inc. Magazine, Betterment, Chime, Credit Seasame, Zola, and the Council for Disability Awareness.

Published|5 min read

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Once upon a time there was a little online bookseller called Amazon. Fast forward a few decades, and that little bookseller bought Whole Foods for $13.7 billion and actually ended up getting it for "free."

The moral of the story is, Amazon CEO Jeff Bezos is very, very business savvy. As customers have benefited from Amazon’s explosions – we take two-day shipping for granted, Amazon Prime has everything you could want in a subscription service, and we’re all becoming impatient waiting for delivery drones – it can be easy to forget that Amazon is still a company, and we can and should be wary of things that seem too good to be true.

If you have a nagging feeling about Amazon Reload, that’s okay. You load money to your Amazon account, get a two percent bonus, and shop to your heart’s content. Sounds great on the surface, and there are definite benefits. It’s useful if you’re already an avid Amazon shopper, and by preloading money to your account you can set an Amazon "budget" for yourself.

Amazon comes out on top, too, since the two percent bonus is less costly than higher credit card processing fees it would normally have to deal with. But is that the only place they’re winning?

Here’s what customers thinking of using Amazon Reload need to know before putting their hard-earned cash into the program.

You have to be an Amazon Prime member

Amazon Reload is free to use. In fact, with the two percent bonus, you’re essentially getting free money. But that’s without taking an Amazon Prime subscription, which is required, into account. Amazon Prime costs $99 for an annual subscription, or $10.99 a month ($131.88 a year).

There are some caveats here. Amazon Prime members place more orders on Amazon than non-Prime members; that’s more credit card transactions – and more credit card fees – so promoting Reload to Prime members makes sense. Customers get rewarded for frequent purchases, and Amazon avoids frequent fees.

But it shouldn’t be a selling point for non-Prime members. Think of it like a sale item: stores are counting on customers buying items they normally wouldn’t, because they’re "saving money" (but not really, because it’s money they wouldn’t have ordinarily spent).

If it makes sense for you to join Amazon Prime, you should. The monthly or annual fee is likely to be more than you’ll make back with your two percent free money on Amazon Reload, though, and you need to take membership fees into account when you’re considering the program.

You have to use a debit card

With Amazon Reload, you have to use your debit card to reload your account. That may not be an issue for you, but there are upsides to using credit cards instead of debit cards.

First, you’re not going to get the same rewards with a debit card as you do with a credit card (including on very specific reward, which we’ll get to later). Cashback, air travel miles, and more are the norm rather than the exception with credit cards. Not so with debit cards. The rewards you can accumulate with a credit card are likely more than the two percent Reload bonus.

Debit cards also don’t come with the same protections that credit cards do. Cardholders are limited to $50 of liability in the case of fraudulent purchases, but debit cards usually don’t have those same safeguards. That’s why most people recommend not using your debit card online.

Can you trust Amazon with your debit card information? Probably. But customers also thought they could trust Target, T-Mobile, Chipotle...well, you get the picture. Better safe than sorry.

Your 'money' is stuck at Amazon

When you use Amazon Reload, it’s basically like buying an Amazon gift card over and over again. You’re crediting your own account. That means that your money can only be used on Amazon.

As mentioned before, this can be a good way to budget your Amazon spending. Always afraid you’re going to max out your credit card or drain your bank account thanks to Amazon deals? Now you can load a specific amount to your account, get your bonus money, and spend only that amount.

But it also locks you into Amazon. They want this, of course, but you may not. You probably want the flexibility to spend your money the way you need to, and not have it be useful only at a single retailer, no matter how many things you can buy in bulk from said retailer. You never know when an emergency comes up and you wish that $100 was sitting in your bank account instead of your Amazon account.

There are better Amazon deals

Two percent bonus money is good. A five percent reward is better. Why not just do that instead?

You can, with the Chase Amazon Prime Rewards Visa Signature Card. Not only do you get five percent back on all Amazon purchases, but you get two percent back at restaurants, gas stations, and drugstores, and one percent back on everywhere else. The standard, non-Prime version of the card gives the same benefits, but with three percent back on Amazon purchases – still more than what Amazon Reload gives, and you don’t have to worry about the added expense of an Amazon Prime account.

As always, you should be careful about opening a new credit card. Watch out for fees (the Chase card doesn’t have any annual fees), interest rates, and spending limits, and be sure that you can use the card responsibly. But the point is that there are better options out there for stretching your money. Even if you don’t use an Amazon-specific credit card, options like the Citi Double Cash Card nets you the same two percent that Amazon Reload does, and gives it to you no matter where you spend.

There is definitely an audience for Amazon Reload; if you have an Amazon Prime account already, aren’t in the market for a new credit card, and make a lot of purchases, it may be for you.

But there’s not a lot to sell new customers on. The "hidden" Amazon Prime subscription fees, the dangers of using debit cards online, the limitations of holding your money in Amazon, and the better alternatives that are out there mean that you should think twice about using it.Image: Adam Matan