Completely disagree. I don't like buying Amazon stuff on gift cards. I will use gift cards when I get a significant discount like Lowe's Amex offers but I'd much rather have 5% cash back to spend on Amazon over using an ink plus to buy gift cards, even if those points are worth 7.5% back. The credit card protection benefits, lack of cash flow issues, and not having to deal this the hassle are worth the extra 2.5% if a credit card is going to give me 5% value for no hassle or effort. Last week I was going to use a credit card to return a suit I bought on Amazon 2 months ago. Unfortunately when I looked I saw that I bought the suit on a gift card. That's $140 right there. There are other times I've used extended warranties on Amazon purchases. I'd rather use a credit card that has those benefits vs. gift cards that have no benefits.
Plus, the extra 2.5% is only for travel. I do travel but not that much. I already have a lot of Chase points between my wife and I. It's going to take awhile to use those points. Especially since using the Chase points for anything but flights is dicey. Hotels sometimes offer better rates/deals through other sites or I usually use AirBnb when travelling with my family. Costco typically gives me much better rates for car rentals. So figure it will probably take me somewhere in the range of 3-7 years to consume my current balance of Chase points, if not longer. The present value of the 7.5% lowers that number closer to 5%. I'll take the 5% cash that I can use on my next month's Amazon purchases.
You have some good points, but I still don't agree.
Floating $500 in Amazon credit, given how often I buy from them, is not really a cash flow issue for me. To the extent it is for you, or others, you can reduce that amount accordingly, depending on the frequency with which you shop there. Bottom line, given how often people buy groceries, pass by an office supply store or a CVS, one should easily be able to manage having the right amount of Amazon cash on hand to extract better value than Amazon 5%.
Additionally, your Amazon 5x only gets you 5% off
at Amazon, whereas Ink 5x gets you a minumum of 5x on *anything* or 7.5% on travel (or on anything based on gray-market value).
With respect to your warranty issue, I simply don't have it. I only buy things with Amazon GC that are either consumable, perishable, or otherwise not going to be returned. Anything not fitting those categories gets put on an AmEx. It would not be put on this Amazon card, or any Chase card for that matter.
Finally, there are often ways to get better than 10% off Amazon using 5x cards and stackable offers. Constraining yourself to using Amazon card leaves substantial amount of money on the table.