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Amazon recently slipped the news that it will be offering an online checking account. The company, known for taking over existing businesses and products, looks to be preparing to jump into banking. According to Wall Street Journal, Amazon is talking with various banks, including JP Morgan Chase & Co about creating a branded online checking account.
And why not? It already offers some great credit card options. But will this checking account actually come to fruition? And could it prove to be one of the best online checking accounts available? It all depends.
Amazon Checking Account Won’t Become a Bank
From the online chatter, this Amazon checking account prospect is still pretty vague. But one thing is clear: Amazon doesn’t plan to actually become a bank. It didn’t really become a credit card provider, either, for its branded credit cards. These are managed in partnership with other banks and credit card companies. My own Amazon card is managed by Synchrony Bank, for instance.
Right now, it looks like Amazon is planning to form a similar partnership for an online checking account. Prime contenders appear to be JP Morgan Chase or Capital One. These banks already have offerings in the online checking account space. This project is still fairly new, though, so another bank partner may wind up coming out of left field.
Bottom line: Amazon doesn’t want to be your bank. They just want to sell you all the things you could ever possibly need. Preferably using their branded credit cards and checking accounts.
It Will Further Tie Consumers to Amazon
With that said, you can expect that any Amazon checking account will make it even easier to buy from the company. Their branded credit cards, unsurprisingly, offer the biggest cash back perks for Amazon-related spending. And it could be that a debit card from an Amazon online checking account could do the same thing.
Besides making it easier–and possibly more rewarding–to buy all you need on Amazon, an Amazon checking account would make it easier for Amazon to access customers spending data. It’s unclear how much personal data they could gather from a checking account. But they could likely get at least aggregate data on how people are spending money from Amazon checking accounts.
The main advantage for Amazon, though, seems to be that they won’t have to pay processing fees to other banks and credit cardholders. If you’re spending on Amazon with their products, Amazon doesn’t have to pay additional payment processing fees. And with the billions of transactions that happen on Amazon, reducing fees on even a fraction of them could stand to save the company a significant amount of money.
Who is the Target Market?
Again, we’ll have to wait for more details here to know exactly what Amazon is planning. But right now it looks like the primary target markets will be the unbanked/underbanked and teenagers. It will likely also keep millennials in mind, since they’re already Amazon’s primary target market. Amazon already offers Amazon Cash, a way for people with no debit or credit card to shop at stores in person. But this is kind of a cumbersome way to manage money, and it doesn’t let consumers shop at as many places as a traditional debit or credit card.
With that said, Amazon Cash is already tapping into the unbanked/underbanked/teenage market. And the Amazon online checking account could be expected to do the same. Of course, if they offer a truly great product, they might steal Amazon customers left and right from more traditional banks and financial institutions.
What To Expect
So what should you expect if Amazon does roll out a digital checking account? Well, you can expect it to be pretty easy to set up and even easier to spend on Amazon. You can probably expect very low fees or even no fees on a monthly basis, and likely lower-than-average fees for things like overdraft charges and minimum balances.
Of course, having an Amazon checking account could make shopping on Amazon easier, too. Right now, using a checking account, rather than a debit or credit card, on Amazon can be a bit of a pain. If it’s an Amazon-branded account, this won’t likely be a problem. And you may find that the account even comes with rewards for Amazon-specific spending.
However, we’ll have to wait and see what Amazon has in store as more information about its potential online checking account becomes public.
Will It Work For You?
We can’t really recommend an account without any details on it, of course. But chances are if you’re a frequent Amazon shopper, you may benefit from an Amazon checking account. You’ll just want to be sure that you keep your spending under control with the millions of temptations for overspending on the website. And be sure you check into the privacy fine print on the account. You’re already giving Amazon loads of personal data just by browsing and shopping there. You may not want to turn over even more personal data by signing up for their checking account.
Alternatives to an Amazon checking account
NBKC Bank offers a checking account with no monthly maintenance fee, no minimum balance requirement and ATM reimbursements (up to $12 per month). The only fee they’ll charge you is for incoming domestic wires and all international wires.
Plus, NBKC Bank has an interest rate of 1.01%. Not only will you save your money on fees other banks charge, but this account actually pays you to keep your money deposited. As a nice little bonus, buying checks with NBKC Bank is FREE.
If you’re in the market for a new checking account and don’t want to wait for a possible Amazon roll-out, then maybe one of the following banks would work best for you. HSBC Advance Checking is great if you direct deposit your paychecks. The account is free if you maintain at least a $5,000 balance with recurring deposits from a third party.
Chime® is also an excellent choice and offers an easy way to save. When you make purchases with your Chime debit card, the change is rounded up and saved to a Chime savings account. Even better, there are no monthly fees to maintain the account. Read more in our Chime Review.
Chime Disclosure - Chime is a financial technology company, not a bank. Banking services and debit card provided by The Bancorp Bank, N.A. or Stride Bank, N.A.; Members FDIC.
1Chime cannot guarantee when files are sent by the IRS and funds can be made available.
^Early access to direct deposit funds depends on the timing of the submission of the payment file from the payer. We generally make these funds available on the day the payment file is received, which may be up to 2 days earlier than the scheduled payment date.
FNBO Direct’s Online Bill Pay account pays 0.65% APY and also comes with no monthly fees. Another free option is Ally Bank. There’s no minimum deposit required to open an account and the interest rate is tiered based on your balance.
Finally, if you can maintain $100,000 in combined personal or commercial deposits or even in investment balances with HSBC, you should look into its Premier checking account. Of course, what really makes a bank stand out is seeing what it can offer you.
We put together a list of best checking and savings account promotions and deals that you’ll want to check out before making a decision. Who knows, maybe one day you’ll see Amazon on that list.