I agree that the motive is not necessarily pure. Furthermore I think Amazon is a huge force opposite sustainable economics, and that the American credit system, credit bureaus, and the symbiotic partners who encourage people to take on debt and prey on them in that vulnerable, owned state, are a diabolical construct engineered for social control and a crime against the American people.
But, I think the comparison with Starbucks is not quite right. This is short-sightedly better and long-sightedly worse, for a lot of the same reasons.
I don’t have any problems with store cards in general. I see them as a mutually beneficial agreement between retailers and frequent customers. It allows the retailer to capture a portion of the transaction revenue that would normally go to a third party (and some extra data about the customer), and in return pass on some of the savings to the customer in the form of discounts and rewards.
Sorry; that’s not a good product at all.
There are loopholes to this that make Prime much cheaper though.
For example, Prime Student [1] is $6.49/month or $59/year.
The EBT subsidized Prime membership mentioned elsewhere in the thread is $5.99/month (no annual discount).
You can also use Amazon Household [3] on an existing Prime membership to qualify multiple people in the household as Prime members. All members get the 5% benefit, not just the card holder. I doubt this stacks on the student version but it definitely does on vanilla Prime and likely on the subsidized version as well.
[1]: https://www.amazon.com/Amazon-Student/b?node=668781011
This assumes that one won't make use of their Prime benefits.
You factor in the cost of the Prime membership in the break-even calculation, but as someone else noted, that does not count the value of other Prime benefits. I was already a Prime member when the store card was introduced, which means I was valuing those benefits at ~$120/yr on their own.
Different people have different shopping needs/preferences. I have no trouble conceiving of the idea that what might be a good value to me might not be for someone else. In your case, I wonder how you are able to say "Sorry; that’s not a good product at all" with such conviction when there are so many people out there (~100 million) with Prime memberships in the US.
Nothing about this card locks you into buying Amazon brand products that I can tell. Buying Amazon brand products have the same effect as buying non-Amazon brand products on Amazon.
People saying that it's great because you get 5% back on Amazon purchases are myopic. Nobody on HN would be celebrating the Starbucks Card Credit Builder where you get a 5% discount on purchases and can build credit but can only do so by purchasing products from Starbucks and its affiliates. Why? Because as others have said, there are already plenty of secured Visa/Mastercard cards out there that don't convert your capital to funnybux and lock you in to a particular vendor and its best buddies.