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Should You Get the Amazon Rewards Visa Card?

Whole Foods isn't exactly known for its low prices, but since the grocery giant was bought by Amazon in 2017, changes have been afoot. The online retailer has slashed prices on many Whole Foods products, and on Tuesday announced that shoppers using the Amazon Prime Rewards Visa card will earn 5% cash back on purchases made at Whole Foods.

There is a small catch: The 5% cash back benefit, which also applies to Amazon.com purchases, is only available to members of Amazon Prime, a subscription program that offers free two-day shipping, access to streaming video and music, and a variety of other Amazon-specific perks for $99 a year.

All other users of the Amazon Rewards Visa get 3% cash back on Amazon.com and Whole Foods purchases. All cardholders get 2% cash back at restaurants, gas stations and drugstores, and 1% back on all other purchases.

The card, which is offered through a partnership with Chase, also comes with several other benefits, including no foreign-transaction fees on purchases made abroad, lost luggage reimbursement and no cap on rewards earnings. Cardholders can redeem rewards at Amazon itself, but also through cashback in form of statement credits, gift cards and at Chase's travel rewards portal.

So Is It Worth It to Apply for the Rewards Card?

For existing Prime members who are big Amazon spenders, it's probably a good bet—especially because there's no annual fee to own the card. In fact, Prime members spend, on average, $1,300 a year at Amazon.com. If they put those purchases on the Amazon Rewards Visa card, that equals $65 in cash back. Spend another $680 at Whole Foods each year and you have enough cash back ($99 total) to pay for the Prime membership.

That's a worthy calculation to consider before applying for this card: Do you already spend more than $1,980 a year on Amazon and Whole Foods purchases combined? If so, owning the card and becoming a Prime member if you're not one already is worth considering, because the cashback pays for the membership itself.

But if shelling out $99 a year for a Prime membership isn't something you'd do anyway, the card is less attractive and you may want to consider other rewards cards.

That's because there are others out there that can earn you 3% or more on all grocery purchases (American Express has several), as well as other cards that offer higher returns on dining out and gas. Still, 3% back on Amazon.com purchases may be worth it if you spend a lot at the online retailer each year.

The key, as usual, lies in examining where you spend your money in order to maximize your cash back rewards and using the right card on the right purchases.

Here's when it makes absolutely no sense to apply for the card: If you plan on carrying any sort of credit card balance. The APR on the Amazon Rewards Visa card is between 15.49% and 23.49%, depending on an applicant's credit-worthiness. That rate will wipe out any rewards you might earn—and saddle you with additional debt.

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