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Amazon Card Trumps AmEx Rewards at Amazon.com

Remember AmEx's announcement early this year that cardholders could now use membership rewards points to pay their taxes? Since it's always annoyed me that we can't pay taxes with a credit card for free, I, for one, was excited when I heard there was a new option for paying taxes online.

That is, until I dug a little deeper into the conversion rate and realized what a waste it would be to drop 200 rewards points for every $1 in taxes due. That's 400,000 points for a $2,000 tax bill—ridiculous! Recently, AmEx announced another new partnership that allows membership rewards points to be redeemed for products purchased through Amazon.com.

If you've paid a visit to Amazon lately, it's pretty hard to miss the huge ads on the homepage promoting "a brand new way to pay for things you want on Amazon.com." So how does the conversion rate stack up this time around? It's better, but not great. Based upon reports we've seen so far from cardholders, the going rate is 0.7 cents for every membership rewards point. That's a 30% discount off the penny per point conversion rate that savvy credit card users like to shoot for when redeeming points.

Similar to the "points for taxes" partnership launched early this year, this new offer seems to primarily target Amex corporate card users that rack up big-time points (usually on the company's tab) and then want an easy way to unload them for products of their choice. These users are typically much more amenable to sucking it up and accepting a 30% hit for the sake of convenience.

On the other hand, if you're a frequent Amazon shopper (with at least fair credit) simply looking to get the best bang for your buck, you should probably hold onto your membership rewards points and check out the Amazon.com credit card.

According to Chris Conrad, Marketing Director at Chase, one of the key benefits provided by the Amazon.com card is that users can earn "3 points per each dollar spent on Amazon with no limits." In addition, cardholders will earn 2 points per dollar spent on gas, dining, and pharmacy, plus 1 point for ever dollar spent elsewhere. The restaurant category is broad and even includes "quick service" restaurants like Starbucks. "Double points every day with your coffee is really a big benefit," Chris added. Not only will you rack up rewards points quite fast for a credit card that boasts no annual fee, but the conversion rate when redeeming your points on Amazon.com is also much better than what you would get when redeeming Amex membership rewards points.

Chris highlighted the fact that "$100 in spending always equals at least $1 in rewards", and the option to request cash back in the form of $50 or $100 statement credits was even added this past August. The 100 to 1 conversion rate keeps it clean and simple too. 5,000 points could get you a $50 gift card for dining. 10,000 points could get you a $100 statement credit on your next bill.

And to sweeten the deal even more, Amazon is offering a promotion that gives you a 5% gift card bonus when you use your Amazon credit card to purchase $50 or more in Amazon.com gift cards during the month of October. That's an additional 5% back on top of the 3% rewards you'll already receive for using your card at Amazon.com. Not a bad deal if you're in the mood to get a head start on your Christmas shopping and grab some gift cards for family or friends.

But hurry, because this special offer only lasts for five more days!

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Joshua Heckathorn's picture

Joshua Heckathorn was President of Creditnet, is a credit expert and has been featured on CNNMoney, FOX Business, Yahoo Finance, The Street, and many other national publications during the past ten years.  He received a Bachelor of Science in Management (Finance) from Brigham Young University's Marriott School of Business and earned his MBA from Seattle University.

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Mike's picture

I shop for everything on Amazon. Best credit card I've ever had...hands down. Chase's customer service could be better though.