Amazon has a 'budget-friendly' Prime option for low-income customers - but it may actually be a trap

Rafi Letzter/Tech Insider

Amazon Prime is now more expensive if you pay monthly.

• Amazon is raising Prime membership fees for people who pay monthly.
• The increase will be from $10.99 to $12.99 per month.
• This is likely to impact its low-income shoppers who can't afford the one-time annual membership fee.

Amazon Prime just got more expensive for some of its members.

Today, the online store announced it would be increasing monthly Prime membership rates from $10.99 to $12.99, which comes to around $156 a year.

Amazon Prime is a subscription service that offers its paying members services such as free two-day shipping on certain purchases and unlimited streaming of movies and TV shows with Prime Video.

These changes are likely to impact its lower-income shoppers who can't afford to pay the one-off price of $99 for a year-long membership.

Moody's Lead Retail Analyst Charlie O'Shea said in a statement that Amazon's monthly deal "still affords members a more budget-friendly option, with the ability to 'flex' the membership as they see fit."

But she also noted that the new increase means that monthly subscription members will be paying a 57% premium over yearly members - at nearly $60 extra a year.

Amazon does not disclose how many of its members pay on a monthly basis versus yearly, but this price increase could encourage customers to switch and pay the one-off annual fee. However, this isn't an option if you don't have the disposable income to cover it.

A survey of 7,000 people across America done by GoBankingRates in 2016 showed that as many as 34% of people have no savings, 69% has less than $1,000.

Amazon's price increases seem to be going against the grain of its initiative last year to offer a cheaper membership to shoppers on government assistance. Customers with an Electronic Benefits Transfer (EBT) card can now qualify for a reduced $5.99 monthly membership. These rates have not been changed.

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