Making The Most Of Amazon.com

According to the 2016 Forbes listing of the world’s richest billionaires, Jeff Bezos is the 5^th richest person on Earth. His fortune comes almost entirely from Amazon.com, the online retailer he started in 1994. When it began, Amazon only sold books, but has since grown to sell just about everything.

Their enormous size and purchasing power, and lack of expensive storefronts, means that Amazon often has the best prices to be found on a vast range of products. This has led to consumers, including your trusty Frugalvore authors, to buy more and more "stuff" from them. That said, there are still some ways to save even more money shopping at Amazon and we’ll look at some of them below.

If you purchase a lot from Amazon, and you haven’t already, you should seriously consider signing up for Amazon Prime. At the time this article was written, it cost $99 per year. That annual fee gets you free two-day shipping on most items. In many cases, if the warehouse that ships your item is in the same state as you, you may even get your order delivered the next day. You will quickly get used to this and when you order online from a different retailer you’ll find it drives you crazy when your package takes several days to arrive.

But Amazon Prime doesn’t just stop there, Prime members are also entitled to a long list of other free benefits as well. Many of them will save you money.

After you’ve got Amazon Prime, the next way you can save money is to sign up for the Amazon Prime Store Card. This credit card will give you 5% back every month on all your Amazon purchases, which is pretty darn good. The drawback of this card is that the interest rate (APR) is quite high and is currently about 26%. This means you’ll definitely want to pay off your balance in full every month. There is a way to pay no interest for large purchases for six months, but if you don’t pay it off within that time you’ll get hit with the full deferred six months interest—so probably best to just avoid this possibility and pay in full.

One final way to save money on Amazon is to wait for the best price on an item before purchasing. There is a website called CamelCamelCamel.com, which allows you to view historical price information for most items sold on Amazon, and then enter a target price that CamelCamelCamel will track and then notify you if/when the item reaches that price. Clearly this is only of use if you can hold off purchasing an item until it reaches a better price. If you can wait, it is common to save an additional 5 or 10% on an item using this method.

Improve Your Credit Score

There are several factors that can affect your credit score. The most obvious of these is paying your bills on time. In fact, your payment history is the number one variable used by the credit bureaus when calculating your FICO score. This is closely followed by the amount you owe.

Now, you might assume that the more you owe, the worse it will affect your score, but it’s not quite that simple. In fact, the credit bureaus don’t just look at the amount you owe, but at a percentage that they arrive at by dividing the total amount you owe by the total amount of credit available to you. In fancy terms, this is known as your “utilization ratio,” and in general you want to keep this number under 20%.

Let’s look at the example of a person who has a single credit card. Say they owe $2,100 and that their credit limit on that card is $10,000. This means their utilization ratio is $2,100 / $10,000, which works out to 0.21 or 21%.

As mentioned earlier, most experts suggest keeping your credit utilization ratio under 20% to maximize your credit score. If you can manage it, the best way to do this would be to pay off enough of your debt to get the ratio under 20%. This way you both potentially increase your credit score and pay less monthly interest on your debt—a win-win!

If our example person can manage it, the best thing for them to do would be to pay off more than $100. Let's say they pay $200, which makes the new amount they owe $1,900, and their utilization ratio would be $1,900 / $10,000, which is a little below 20% at 19%.

But if you can’t repay some of the debt, there is another trick you might try. Contact the credit card company and request an increase of your credit limit. If the credit card company gives you enough of an increase, it can bring your utilization ratio below 20%.

Continuing our example from above, if the credit card company increased our example person's credit limit to $12,000, now their utilization ratio would be $2,100 / $12,000, which is below 20% at 17.5%.