How American Express Really Works: What We Learned by Analyzing 33.8 Million Active Credit Card Users
Learn all about American Express and its products and services. AmEx cards and services are no longer as exclusive as they once were. Does that mean you should use them, though? Find out with this guide.
Your credit card is one of the most important tools for maintaining and improving your financial health.
Pick the right card and you can get cash back or other rewards on your most frequent everyday purchases.
Choose the wrong card and you could face sky-high interest rates and fees that ruin your credit score, sap your savings, or prevent you from qualifying for a mortgage.
With hundreds of cards to choose from—each with its own rewards, benefits, and drawbacks—evaluating a credit card issuer can be challenging, even in the best of times.
It becomes even more of an issue when you're looking at a company like American Express, also popularly known as AmEx.
AmEx has spent decades cultivating an aura of exclusivity around its cards, marketing them as the obvious choice for executives, jet-setters, and the well-to-do.
This is an accurate depiction—but only for some of AmEx's cards.
Yes, some of its cardholders get access to exclusive events, like private dinners hosted by Michelin-starred chefs, but not every member is the same—and not every AmEx card is, either.
AmEx also has cards for non-millionaires. If you have good credit and a consistent income, you can most likely get one of the company's cards designed for people without multiple commas in their bank balance.
Still, plenty of people assume that an AmEx card is out of their reach.
That's part of the reason why I dug deep into the data on AmEx as a company—to dispel that notion and to find out how AmEx Cards really stack up against their competitors.
On top of that, I'm also curious about what existing clients have to say about the quality of their services.
Aside from credit cards, AmEx is also at the forefront of providing financing to small and medium-sized businesses.
So if your company ever needs a cash infusion, it would be very helpful to find out if AmEx can offer you the best terms on a loan.
We've researched and collected the most relevant and up-to-date information on American Express and its cards—including data about their closest competitors—so you will be able to pick the best card option for you.
Read on to get a deeper insight into how AmEx actually works, and to find out if there's an AmEx card that's a good fit for your own lifestyle needs and personal buying habits.
American Express Overview
AmEx is one of the largest credit card companies today, with its customers spending $686.9 billion dollars with its cards in 2017, according to the Nilson Report.
That means AmEx controls 20% of the credit card market.
There are four important things to know about AmEx
Four essential facts about the company can explain its popularity and serve to help you determine whether one of its cards could be right for you.
AmEx is known for serving premium consumers. These cards are defined by annual fees costing hundreds of dollars and being favored by a wealthy clientele.
That's starting to change, though.
Competition and attempts at further expanding the company's market share are pushing AmEx to offer cards to more than just the rich.
Solid financing options for business. Small and medium-sized businesses often turn to AmEx for fast loans with competitive interest rates.
Its business credit cards also provide benefits for everyone from corporate employees to entrepreneurs.
An expanding list of partners. A main draw for AmEx is its ever-growing network of partners that provide cardholders with exciting rewards.
These include well-established industry names like Hilton, American Airlines, and newer ones like Uber.
It's looking towards a digital future. AmEx is trying to future-proof its cards by integrating them with Google and Apple Pay, and finding other ways to make them as seamless and easy to use as possible.
Now that it's clear why AmEx is so popular, let's dive deeper into these four areas.
How the Cards Stack Up
The cards AmEx offers each come with their own strengths and drawbacks.
Knowing the details can help you pick the one that's right for you.
Be prepared to pay a price for premium cards
AmEx is known for servicing high-net-worth individuals—and with good reason.
Some of its cards carry steep fees beyond what the average person might consider.
This can range anywhere from the AmEx Platinum Card charging members a $550 annual fee to the Green Card costing $95 per year.
Say goodbye to interest payments with certain AmEx cards
Many AmEx cards provide a compelling reason for paying these annual fees.
There's no interest.
That's because many of these cards aren't true credit cards—they're charge cards.
You can't carry a balance. Charge cards force you to pay off what you owe every month.
If you don't, your card becomes inactive.
It's for this reason that cards like the AmEx Gold Card require a credit score of 700 or above.
AmEx wants to make sure you will pay what you owe.
Earn rewards ranging from the practical to the extravagant
Some AmEx cards offer rewards that are comparable to what you would expect from any other credit card company.
Earn decent cash back. For instance, the AmEx Gold Card offers a 25,000 point sign-up bonus worth $250 and lets users earn points for every dollar they spend.
You can get three points per dollar spent on airfare, two at places like supermarkets and restaurants, and one point everywhere else.
That means spending $50 at the grocery store would earn you $1 back, which isn't bad, by any stretch.
Solid introductory bonuses. The AmEx EveryDay, Gold, and Platinum cards all offer some nice introductory rewards, as long as you meet certain criteria.
With the EveryDay card, spending $1,000 within your first three months nets you 10,000 Membership Rewards points worth $100.
Spending $2,000 on a Gold card within three months earns you 25,000 points worth $250.
Finally, racking up $5,000 in purchases on your Platinum card within the same time period will get you a whopping 60,000 points worth $600.
Platinum members get exclusive events. Sign up for a Platinum card and you become eligible for some head-turning perks.
That includes the By Invitation Only series of events.
These are exclusive events, gatherings, and experiences available only to Platinum card holders.
You may find yourself getting a chance to enjoy a VIP experience at the Cannes Film Festival, trying rare wines in Napa Valley, or tearing up the track at the BMW driving academy.
All of these events cost money—some, thousands of dollars—that you can pay for outright or by using AmEx reward points you've accumulated.
Still, you won't get your foot in the door without a Platinum card.
You don't have to be wealthy to get an AmEx
If you're not planning on spending thousands of dollars on an AmEx-exclusive gourmet meal or paying hundreds of dollars in annual fees for a card, you still have options.
AmEx has begun introducing cards for the type of person who doesn't have regular access to a private jet.
Earn rewards, but pay interest. This includes the AmEx EveryDay credit card that earns cash back on some purchases and doesn't charge an annual fee.
However, it does charge between 14.49–25.49% APR.
That means if you carried a balance of $150, you would owe an additional $21.74–$33.24 in interest.
You don't need excellent credit for this card. Since this and other options like the Blue Cash Everyday card are credit cards instead of charge cards, they don't require a credit score in the 700's to qualify.
If you're in the mid-600s, you should have a good chance of getting approved.
You could get a better card from an AmEx competitor
Credit card companies face fierce competition these days and AmEx is no exception.
Losing ground for premium customers. AmEx used to be the king of high-fee, high-reward cards.
More travel points with AmEx, more options with Chase. For instance, the AmEx Platinum card offers five points for every dollar spent on flights booked directly with airlines or eligible hotels booked on amextravel.com.
That means if you booked a $2,000 flight, you would earn $100 worth of points.
However, the Chase Sapphire Reserve earns you three points per dollar spent on travel as a category—not just flights.
That goes for Ubers, taxis, and car rentals as well—with Chase, you've got options.
You also get three points for every dollar spent on restaurants and dining.
More than that, those points are redeemable for an extra 50% of their value through Chase's Ultimate Rewards platform.
So that $2,000 flight would earn you $60 worth of points—which you could then redeem them for $90 in Ultimate Rewards.
Spend $250 on transportation and meals while you're on the ground and the Sapphire Reserve earns you even more points than the Platinum card!
Better cash back cards are available. When it comes to AmEx's non-premium cards, there are better cash back options than the AmEx EveryDay or the Blue Cash EveryDay.
For instance, the EveryDay card earns you double points at supermarkets on up to $6,000 worth of purchases per year and one point on every other purchase.
If you swiped $40 worth in groceries, you would earn 80 points, for instance.
However, these cards lack the flexibility of competitors like the Citi Double Cash card, which earns two points on every purchase—one point when you purchase an item and another when you pay your balance.
Right now, you'd probably be better off looking somewhere else other than AmEx if you want a solid, everyday credit card with great cash back rewards.
Options for Businesses
AmEx doesn't just offer credit cards for consumers.
It also provides services that can help small to medium-sized businesses get a quick cash infusion, as well as credit cards aimed specifically at business people.
Get cash for your business fast with Merchant Financing
The Merchant Financing program from AmEx offers fixed-fee loans for businesses that accept its cards and meet a few other requirements.
Qualifying organizations can get a loan ranging from $5,000–$2,000,000 within just a few days.
Terms and conditions apply. AmEx doesn't give these loans out to just anyone, however.
Other than accepting AmEx payments, qualifying for the program requires your business to have a minimum annual revenue of at least $50,000 and process $12,000 worth of credit or debit card transactions per year.
You also need a personal credit score of at least 700.
Pay a fixed fee for loans. The Merchant Financing program doesn't charge traditional interest on its loans.
Instead, businesses pay a fixed fee of 3.5–14% of however much is borrowed, with the rate based on the term of the loan.
Loans on a six-month term will charge 1.75–7%.
That means if you borrowed $25,000, you would pay a $437.50–$1,750 fixed fee.
A 12-month term would charge 3.5–14%, while a 24-month term would charge a 7–28% fee.
Pay early, pay less. You can get a portion of your fixed fee waived if you pay back your loan early.
For instance, paying back the entirety of a 12-month loan within 180 days could waive up to 25% of the fee.
That would be enough to knock off $109.38–$437.50 from a $25,000 loan.
Money in a flash. One of the best things about the Merchant Financing program is how quickly it can put cash in a business's bank account.
Most loans are processed within a few business days.
Plus, you can easily apply online.
Meanwhile, some other small business loans can take between 60–90 days to apply, process, and close.
That makes the Merchant Financing program a great option for companies that need access to cash as quick as possible.
Pay every day. This program does come with one unusual feature.
Rather than making monthly payments over the life of the loan, you pay every day.
AmEx will either withdraw a percentage of your credit or debit card receivables, or directly withdraw the money from your business bank account.
For some businesses, these small withdrawals won't prove much of a hassle.
However, companies with seasonal or fluctuating income should consider whether they would be able to maintain enough balance in their accounts to make their payments every day.
Customize your rewards with AmEx credit cards for business
Aside from its credit cards for regular purchases, AmEx also provides a line of cards for business users.
Similar to normal cards. Like the typical AmEx card, most of the business-oriented credit cards come with rewards, annual fees, and no interest rates due to being paid in full every month.
For instance, the Platinum Business card collects the same five points per dollar on eligible flights and hotels as the normal version of the card.
The StarWood Preferred Guest Business card lets you earn StarPoints, which can be redeemed for free nights at various Starwood hotels.
Meanwhile, the Blue Business Plus card earns 2% cash back on your first $50,000 in purchases, and then 1% on every dollar spent after.
It's when you look at the Gold Business, SimplyCash Plus Business, or Plum Business card that things start to get interesting.
Pick two payment plans with Plum. Unlike most credit cards, the Plum Business card from AmEx gives you up to 60 days to pay off your balance without racking up interest.
Even better, paying off your balance within 10 days of your statement closing date earns you 1.5% of your balance in credit.
You can either pay off your card early for extra cash or up to a full 60 days later if money is temporarily tight.
Choose your rewards with Gold. The Gold Business card actually lets you earn extra rewards from one of five categories.
You earn three points from that particular category and two in all others.
Options for this include:
- Airfare purchased from airlines
- Select advertising purchases
- Gas stations
- Shipping costs
- Hardware, software, and cloud computing purchases from select providers
Let's say you picked gas stations, for instance.
If you paid $40 to fill up your tank and then $500 for a new laptop, you would earn $1.20 in points from the gas and $10 from the laptop.
Customized Cash Back with SimplyCash Plus Business. The SimplyCash Business Plus card lets you earn 5% cash back on all purchases made at office supply stores and cell phone bills.
The card also lets users choose a category to earn 3% back on the same categories offered by the Gold Business card, as well as three other options:
- U.S. Restaurants
- Hotels rooms purchased directly from hotels
- Car rentals
AmEx supports local businesses through Small Business Saturday
You don't need to be an AmEx customer to be familiar with the company's Small Business Saturday initiative.
Occurring on the Saturday following Thanksgiving every year since 2010, Small Business Saturday was started as the company's way of supporting local businesses.
A well-known holiday. Small Business Saturday has been publicized quite well by AmEx.
Nine out of ten consumers aware of the holiday say that Small Business Saturday does encourage them to shop small, according to the company's research.
AmEx Goes Digital
New technologies are changing the way credit card companies do business and you can expect AmEx to be part of these developments.
In its bid to remain a preferred brand to consumers in this digital age, the company is continually looking for ways to make its card-users' experience as seamless as possible.
Get multiple ways to pay with AmEx
One way AmEx is trying to adapt is by integrating its cards with Google Pay and Apple Pay.
With either app, you just upload your credit card information and you're good to go.
Breaking into debit cards. AmEx is also venturing into debit cards with its Serve app and card, also available on App Store for iPhone and Google Play.
The card is a reloadable debit card, meaning you need to transfer money onto it to use it.
The app lets you do just that without ever having to set foot in a bank or fill out a deposit slip.
AmEx offers better customer experiences by getting social
While AmEx has a customer service representatives standing by the phone lines 24/7, the company is also exploring how online channels can provide better support for those it serves.
Stay in the know with the AmEx Messenger bot. One new area AmEx is exploring is the implementation its own Facebook Messenger bot.
The bot is designed to inform you about the offers and features of your AmEx account, answer basic questions you might have, and inform you whenever a purchase is made on your card.
That last feature stands out most as it can provide an early warning in case your card gets stolen or your account is compromised.
For those privacy-minded individuals out there, don't worry—the bot doesn't share any credit card information with Facebook beyond your purchases, so your credit card information should be absolutely safe.
Customer service is just a tweet away. Aside from reaching out to virtual AmEx employees on Facebook messenger or dialing them up on the phone, you can also get in touch with the company over Twitter.
The @AskAmex account is available to answer all your card-related questions Monday through Friday from 9 am–10 pm Eastern Time.
AmEx prevents fraud using EMV chip cards
With the introduction of EMV chip cards, many credit card companies are no longer requiring customers to sign their receipts when they check out.
AmEx followed suit in 2017, stating that the signature was no longer necessary due to new, advanced ways of detecting fraud.
When it comes to digital, AmEx is pretty par for the course
One important thing to note about everything mentioned in this section—it's been done before.
While it's great that AmEx supports Google and Apple Pay, offers social media customer support, and provides greater anti-fraud detection using EMV chips, none of these is particularly new.
All of these things are also offered by Visa, Citi, and other similarly sized companies.
It's great that they're there if you need them, but if you're choosing between an AmEx card or another competitor's, these capabilities aren't going to tip you in one direction or another.
One thing that does set AmEx apart from its competition is the strength of its partnerships.
That's probably in part a result of the company spending $7.6 billion on these co-branding deals in 2017.
The company has made deals with everyone from Alaska Airlines to Starwood Hotels & Resorts to get its members exclusive deals and benefits.
Fly the friendly skies using your Membership Rewards points
Like most credit card issuers, AmEx has partnered with several airlines.
You can either pay for your flight with Membership Rewards points or transfer these points to the airline's loyalty rewards program.
Be forewarned that this isn't always a good deal, as the exchange rate may be weighted in the airline's favor.
View the full list of eligible airlines that accept point swaps on AmEx's website.
Points let you pay for a night at a hotel
AmEx has partnered with the Hilton Honors program and the Starwood Preferred Guest program.
You can also transfer your Membership Rewards points to both of these programs.
Watch out though—1,000 Membership Rewards points are only worth 500 Starpoints for the Starwood Preferred Guest program.
On the other hand, 1,000 Membership Rewards points are worth 2,000 Hilton Honors points!
Use your points to get great deals with retailers
Several retailers will let you pay with your AmEx points, either online or right at the register.
- BestBuy.com (online only)
- NYC Taxi
- Rite Aid
AmEx offers special deals with Uber
If you're a Platinum Card member, you're eligible for special offers from Uber.
Every month, you'll receive $15 in Uber credit for rides.
You also get an extra $20 in December, which means a total of $35 for the month.
That comes out to a grand total of $200 per year.
Be a VIP. You'll also be upgraded to the Uber VIP program.
Qualifying for that usually takes completing 100 rides with the ridesharing company.
Uber VIPs are guaranteed drivers with a rating of 4.8 or higher who drive nicer cars than usual—though the company is pretty vague about what it means by nicer cars.
Cardholders can get high-quality discounted merchandise
AmEx's Membership Rewards website also highlights special deals where you can buy merchandise at discounted rates using your points.
Unlike other credit card companies, most of these featured items are fairly high-end.
This includes products from Kate Spade, GoPro, and Apple.
Know that other credit card companies offer similar deals
A lot of the partnerships with airlines, hotels, and retailers were innovative when they were first introduced by AmEx years ago.
However, competitors like Chase can now go toe-to-toe with AmEx by running similar deals through the Ultimate Rewards program.
For instance, you can swap out your Ultimate Rewards points for airline miles as well.
That's not to say that the partnerships and programs AmEx offers are bad by any stretch.
Just be sure that the deals they offer are right for you and your spending habits.
AmEx cards are now more accessible than ever, but think before you apply
After reading through this guide, you should be feeling much more confident when deciding whether a card from AmEx is right for you.
The trick is to not let the carefully formulated image AmEx has built up over the years cloud your perception of its cards as being for elites only or out of reach.
Look at the company's strengths and weaknesses when it comes to its cards, business financing options, digital capabilities, and partnerships.
Carefully consider your spending habits to see whether you would be better served by an AmEx card or if you should go with one of its many competitors.
Have you used a card from American Express before?
How did it work out for you?
Any tips, or nightmares, you would like to share?
Let us know in the comments below!