Paycheck Investing: A Guide To Regularly Buying Amazon Stock

Amazon offers its employees a range of benefits, including the opportunity to own Amazon stock. This is a great way to invest in the company through your paycheck. As an Amazon employee, it's important to understand your compensation structure and develop an investment strategy. In your first two years at Amazon, most of your compensation will come from your salary and on-hire bonuses. However, in subsequent years, a higher percentage of your total compensation will come from Restricted Stock Units (RSUs), which are shares of Amazon stock that vest over time.

Additionally, Amazon offers monthly payment plans for eligible shoppers on select products. While these plans are not directly related to investing through a paycheck, they provide flexibility for customers who want to make purchases over time.

Amazon's Monthly Payment Plans

Amazon offers monthly payment plans to its customers, allowing them to make interest-free monthly instalment payments on select products. This option is not available for all customers or products. Amazon considers criteria such as purchase history and product price to determine eligibility for its payment plans.

To enrol in an instalment plan, look for the "Monthly Payments" option on the product detail page or during checkout. If available, you will need to make an initial payment when the item ships, which will include any tax and shipping or handling fees. Amazon will then divide the remaining balance over several interest-free monthly payments. Typically, plans are split into an initial payment and four instalments, but repayment terms may vary.

You can manage your Amazon Monthly Payments plan by visiting the page for managing payment plans on the Amazon website. It is important to note that Amazon does not check your credit score to determine eligibility, so these plans will not directly improve your credit score. However, if you charge your plan payments to a credit card and pay on time and in full each month, it may indirectly help.

Additionally, Amazon Pay allows users to transfer their Amazon Pay balance to their bank account. This can be done by navigating to the Amazon Pay section in the Amazon app, selecting 'Send Money', and then choosing 'Bank Transfer'. Basic details such as account number and IFSC code will need to be entered to complete the transaction.

Amazon Credit Card Options

Amazon offers six different credit cards, across three different issuers, with eight potential rewards structures depending on whether you're an Amazon Prime customer and whether you're using the card for personal spending or for business purchases. Here is a breakdown of the Amazon credit card options:

Amazon Credit Cards for Personal Use:

• Prime Visa: This card is for Amazon Prime customers and is accepted anywhere that takes Visa, not just Amazon. It offers 5% back on all Amazon and Whole Foods purchases, 5% back on purchases made through Chase Travel, 2% back at restaurants, gas stations, and on local transit and commuting, and 1% back on all other purchases. The annual fee is $0, but you must be an Amazon Prime member, which costs $139 annually.
• Amazon Visa: This card is for non-Prime customers and is also accepted anywhere that Visa is. It offers 3% back on purchases at Amazon and Whole Foods, 3% back on purchases made through Chase Travel, 2% back at restaurants, gas stations, and on local transit and commuting, and 1% back on all other purchases. There is no annual fee for this card, but it earns lower rewards rates than the Prime Visa.
• Amazon Store Credit Card: This card is issued by Synchrony and can only be used for purchases at Amazon or eligible brands under the Amazon umbrella. There are two versions of this card: one for non-Prime members, which offers special financing options, and one for Prime members, which offers 5% back on Amazon purchases or special financing options. Neither card charges an annual fee, but the latter requires a $139 Prime membership.
• Amazon Secured Card: This card is also issued by Synchrony Bank and can only be used for eligible Amazon purchases. It is a secured card, meaning you must put down a security deposit of at least $100 as collateral, which becomes your credit limit. This card offers a low, locked-in APR of 10% and the potential to earn 2% back on all eligible Amazon purchases if you're an Amazon Prime member. There is no annual fee, but Prime membership is $139 per year. After 12 months of responsible card use, you may be able to convert this card to one of the unsecured Amazon store cards.

Amazon Credit Cards for Business Operators:

• Amazon Business Prime American Express Card: This card is for small-business owners who have an Amazon Prime membership. It offers 5% back on US purchases at Amazon Business, AWS, Amazon, and Whole Foods, up to $120,000 annually, and then 1% back. Alternatively, you can choose to take advantage of 90-day financing on your Amazon business purchases. There is no annual fee for this card, but Prime membership is required.
• Amazon Business American Express Card: This card is for non-Prime business customers. It offers 3% back in rewards on US purchases at Amazon Business, AWS, Amazon, and Whole Foods, up to $120,000 annually, and then 1% back, or you can choose 60-day financing on Amazon purchases. This card also has no annual fee.

The best Amazon credit card for you depends on whether you are an Amazon Prime member and how frequently you shop at Amazon. If you are a Prime member and a frequent Amazon shopper, the Prime Visa or Amazon Business Prime American Express Card (for business owners) are good options as they offer rich rewards. If you are a casual Amazon shopper, the non-Prime Amazon Visa may be a better choice.

Amazon's Special Financing Offers

Amazon offers several special financing options for its customers. These options are available to eligible shoppers on qualifying purchases. Here is an overview of some of the special financing offers:

Amazon Store Card

The Amazon Store Card is offered in partnership with Synchrony Bank and has no annual fee. Cardholders with a Prime membership can earn 5% cashback on any purchase made with Amazon. The Amazon Store Card can only be used for Amazon purchases.

Amazon Store Card users can choose between equal monthly payments or special financing options. Here are the details of these options:

Equal Monthly Payments:

• Six equal monthly payments for purchases between $50 and $599.99
• 12 equal monthly payments for purchases of $600 or more
• 24 equal monthly payments for select purchases

With these options, cardholders pay 0% APR for the duration of the financing period.

Special Financing:

• Six months of special financing for purchases between $150 and $599.99
• 12 months of special financing for purchases of $600 or more
• 24 months of special financing for select purchases

Customers pay no interest if they pay off the purchase within the specified time, but monthly minimums are required. Interest is assessed on the full promotional balance from the date of the purchase if there is an outstanding balance after the promotional period.

Amazon Visa Card

The Amazon Visa Card is available to any registered Amazon customer and has no annual fee. It offers cashback on multiple levels:

• 3% cashback on purchases from Amazon and Whole Foods
• 2% cashback on purchases at restaurants, gas stations, and participating drug stores

Amazon Prime Visa Card

The Amazon Prime Visa Card is available to cardholders with an Amazon Prime membership. It offers the following cashback rewards:

• 5% cashback on Amazon and Whole Foods purchases
• 2% cashback on purchases at restaurants and gas stations
• 1% cashback on all other purchases
• 10% or more cashback on a rotating selection of Amazon products and categories

Amazon Secured Card

The Amazon Secured Card, also known as the Amazon Prime Store Card Credit Builder, is designed for customers with poor credit. Cardholders must make a deposit ranging from $100 to $1,000, which serves as the credit limit. The Amazon Secured Card offers the same benefits as the Amazon Store Card, including equal monthly payments and special financing options. It has a lower APR of 10%.

Amazon Business Card

The Amazon Business American Express Card offers special perks to business shoppers, including discounts on Amazon Web Services.

Understanding Compensation as an Amazon Employee

Amazon has a unique approach to compensation and benefits, which sets it apart from other companies. The company's salary structure is based on a four-year model that includes a mix of guaranteed cash and stock incentives. There are three main components to an Amazon employee's compensation: base salary, year 1 and 2 on-hire bonus, and restricted stock units (RSUs).

Base Salary

The first component is the base salary, which is a straightforward monthly paycheck. Amazon's average base salary is $98,629 per year, but this varies depending on the role and level within the company. The base salary range for full-time workers entering the workforce at Level 4 is $50,000 to $70,000 per year. It's important to note that Amazon has a base salary ceiling of $160,000, and they prioritize granting RSUs to employees instead.

Year 1 and 2 On-hire Bonus

The second component is the on-hire bonus, which is paid out with every paycheck during the first two years of employment. For example, if an employee receives a Year 1 bonus of $60,000, they will get an additional $5,000 per month.

Restricted Stock Units (RSUs)

The third component is RSUs, which are shares of Amazon stock received over time. In the first year, 5% of the shares vest, followed by 15% at the end of Year 2. From Year 3 onwards, 20% of the shares vest every six months until the employee has been with the company for four years. RSUs increase the variable pay component of the total compensation and can be a significant incentive for employees.

Benefits

In addition to competitive pay, Amazon offers a range of benefits to support employees and their families, including domestic partners and children. These benefits include health care coverage, paid parental leave, paid college tuition, paid time off, and financial counseling. Amazon also provides opportunities for employees to own Amazon stock, participate in 401(k) plans with company matching, and enroll in paid life and accident insurance.

Compensation Philosophy

Amazon's compensation philosophy is based on fairness, incentivization, and a "big picture" approach. They aim to provide fair compensation according to the employee's role, level, and situation, and they consider employees as part-owners of the company. Amazon also wants to attract and retain top talent, so they are willing to negotiate and ensure that total compensation remains competitive, even if the base salary is adjusted.

Investment Strategies

Given the unique compensation structure at Amazon, employees should understand how their pay will change over time and develop appropriate investment strategies. In the first two years, most compensation comes from the base salary and on-hire bonuses, while in subsequent years, a higher percentage comes from RSUs. Automating investments and diversifying portfolios are recommended approaches to maximize retirement savings and achieve short and mid-term financial goals.

Amazon's Employee Benefits

Amazon offers a range of benefits to support employees and eligible family members, including domestic partners and their children. These comprehensive benefits begin on day one and include:

Healthcare Coverage

Amazon offers healthcare starting on day one of employment, along with mental health, advanced cancer care, and 24/7 access to medical advice. Employees can also take advantage of medical, dental, and vision coverage, regardless of their level, tenure, or position.

Paid Time Off

Amazon provides ample paid time and paid holidays, in addition to other leave and medical accommodation options for mental and physical health concerns. This includes paid parental leave, with up to 20 weeks of paid leave for birthing mothers, six weeks for parents who adopt, and six weeks of paid parental leave that can be given to a spouse or partner through the Leave Share program. Amazon also offers a Ramp Back program, which gives birth parents eight consecutive weeks of flexibility and partial work hours as they readjust to work schedules.

Education and Training

In September 2021, Amazon committed $1.2 billion to providing 300,000 employees with access to education and skills training programs through 2025 as part of its Upskilling 2025 pledge. This includes fully funded college tuition for more than 750,000 operations employees in the US, covering the cost of classes, books, and fees.

Financial Benefits

Amazon offers competitive pay, with an average hourly wage of over $20.50 per hour, more than double the federal minimum wage. Employees also have opportunities to own Amazon stock, participate in 401(k) plans with company matching, and enrol in paid life and accident insurance. Financial counselling and estate planning services are also available, along with short-term and long-term disability options.

Employee Discounts and Extras

Amazon employees are eligible for exclusive discounts on thousands of brands across travel, electronics, fitness, entertainment, and more. This includes savings on cell phone plans, vacations, and auto insurance. Amazon Extras is a program that showcases these deals, with some negotiated exclusively for Amazon employees. On average, employees can save over $4,900 per year through this program.

Other Benefits

Amazon also provides a range of other benefits, including:

• Commuter benefits
• Flexible spending accounts
• Adoption assistance
• Group legal plans
• Career Choice opportunities
• Child, elder, and pet care referral services
• Support for children with developmental disabilities
• Survivor and transitional support

Frequently asked questions