Why you may not want to use "Shop with Points" on your Amazon Credit Card

A little disclaimer to start out with: I don't really believe in credit cards in the traditional sense. In my opinion the whole credit system is a joke. But that doesn't mean you can't work the system and enjoy free rewards at the same time. I have had 4 rewards cards for the past year, which is when I started building my credit, and I have never paid a cent of interest on any of them. In the mean time, I've reaped more than $150 in rewards. When I sign up for a new card, I barely glance at the interest rate, because I know it will never apply to me. I only charge on my cards money I already have in the bank.



As I write this in my office in Palo Alto, CA, there are protesters with a big inflatable pig dressed as a sleazy looking businessman across the street in front of an a9.com building. I don't know much about a9 except that it's an Amazon company and the protesters are protesting against Amazon's business practices.

To each their own, but I love my Amazon Chase credit card. It offers great rewards, especially the 3% cash back for purchases made on amazon.com, which is where I buy most things that aren't food or gas. Technically you get "points" for every dollar spent on your card, but it comes out to 1 point = $0.01 in USD. A few months back Amazon introduced "Shop with Points", which lets you spend your points directly on Amazon. This is very convenient and I have used it several times. However, there is a reason that Amazon introduced this feature, beyond just making our lives simpler.

At this moment I have 6821 points on my Amazon card. That translates into $68.21 USD that I can spend on Amazon right now, if I so desire. However, there is a way that yields more cash back. If I log into chase.com/amazon, which is the site for managing the card, there are other rewards options. Interestingly enough I had to dig around for a while before I found them, while there are "Shop Rewards" and "Shop Amazon" banners all over the Chase site. Again, there is a reason they want you to use that option. Eventually I found the other rewards options. As of this writing the link path is: My Accounts > See more information > Redeem rewards. On that page there are several option including gift cards, gas cards, account credit, cash check, etc.

Now consider for a moment. If I were to spend that $68.21 on amazon.com, it's gone. If, instead, I were to have them mail me one of the $50 cash checks, and then deposit that money in my checking account, I can use it in the future to pay off the balance on my card. What's the point? Well let's assume I spent $50 that month on amazon.com; not unlikely for me. When I use that $50 from my checking account to pay off the $50 I spent at Amazon, I get 3% back.

That's $50 * ($0.03)  = $1.50

Now this is an admittedly small amount, but like all small percentages it can add up over time.

So, do I use this feature? No. Why? Because it's not worth my time. It's easier to just buy with points on Amazon. Then why bother writing this? Because there is a principle behind the practice. The principle is that sometimes there are ways to make or save more money by asking yourself why a system is set up a certain way and then looking for alternative ways of using the system. Using your Amazon credit card (if you even have one) this way may or may not save you money, but learning to THINK this way WILL save you money. You better believe Amazon is making a lot of money when their thousands of cardholders choose the "Shop with Points" option.