Amazon Prime: A Useful or Needless Expense?

The purpose of this post isn’t necessarily for you to cancel your membership but to evaluate if having a Prime membership makes sense for you. Analyzing your spending habits or canceling your membership all together could save you more money annually. If Amazon makes shopping too convenient for you, you could end up buying more than you need and spending more than you want.

For me personally, there are only two big incentives for having a Prime membership. The first is free shipping with no minimum purchase amount through Amazon.com. The other incentive is the additional cash back that you receive from using the Amazon Reward Visa Signature Card here. View the other additional benefits of Amazon Prime here.

Why Our Family Canceled The Prime Membership:

Like most e-commerce websites, Amazon provides free shipping on orders of $25 or more without the Prime membership. It doesn’t take very much to reach the $25 minimum. Abby and I add things to our cart when something comes to mind. Once the order surpasses the $25 mark, one of us places the order. If we need something urgent, we take a trip to Target or Walmart instead of waiting for the item to arrive in the mail.

The Amazon Reward Visa Signature Card offers multiple categories to earn cash back. The main category allows you to earn 3% at Amazon.com and Whole Foods. If you are an Amazon Prime member, you earn 5% cash back instead of 3%. I don’t personally have Whole Foods near me, so my focus is strictly on shopping through Amazon.com. If you shop at Whole Foods, then you will have to factor that into the calculation below.

The real question that you have to ask yourself is, do the benefits you receive make sense to pay the price of $139 for an Amazon Prime Membership annually?

Let’s break the math down. For this, you will need to view your account summary and see how much you have spent annually on your Amazon Reward Visa Signature Card. This is a good time to evaluate your spending habits. Attempt to identify trends and/or impulsive tendencies. Could it be possible your spending more on Amazon because of the easy access to free shipping? I know we were at times.

Assuming you have an Amazon Reward Visa Signature Card. If you take the amount that you spent on Amazon and multiply that by the additional 2% that you earn from using their reward credit card. It should hopefully be more than $139.

Example: $6,000 x 2% = $120.

Which means in order for you to recoup the price of the $139 Prime membership price. You would have to spend 7,000 dollars annually. Now this assumes you are not using other unique benefits that the Prime membership offers. Either way, my hope is that you will question whether holding onto the Prime membership makes the most sense for you. Maybe you’ll be like us and cancel it all together. That $139 can be put to better use elsewhere.

Since canceling, Abby and I have discovered that items come much sooner than the listed shipping date. We are not sure if it’s due to the fact that we have an Amazon distribution center locally or if they consolidate trips, which works to our benefit. Our average wait time is typically 2-3 days, sometimes sooner. This has made the transition to not having Prime easier. 

In conclusion, whether Amazon Prime is worth keeping for you today depends on your personal usage patterns, preferences, and how much value you place on the benefits offered by Amazon Prime. My hope is that you will reflect and analyze your spending habits better. In doing so, that might mean canceling your membership all together.