American Express Credit Cards

American Express has a very long history, going all the way back to 1850, long before their credit cards ever hit the street. The name “express” comes from the fact that American Express got its start as an express mail company, coming into existence as a merger between express companies owned by Henry Wells, William Fargo, and John Butterfield.

Two years later, when American Express chose not to expand their operations into the state of California, Wells and Fargo started another company there, Wells Fargo, which eventually grew into a financial institution as well, and is one of the world’s largest banks, as well as playing a founding role in one of American Express’ current competitors in the credit card market, MasterCard.

American Express Credit CardsAmerican Express has always been based out of New York City, from its beginnings as an express company right up to the present day, where it has become one of the world’s leading financial institutions.

The financial services arm of the company started in 1857 when they got into the money order business, competing directly with the money orders from the U.S. Postal Service. American Express never shied away from taking on big competitors though.

In the late 1880’s, company president J.C. Fargo travelled to Europe, and in spite of his wealth and prominent position, and in spite of carrying letters of credit from the U.S., he had great difficulty obtaining funds at European banks. This spawned the idea of American Express Traveler’s Checks, launched in 1891, which are still offered today.

Eventually, American Express was forced out of the railway express business, and the financial end of their business ended up becoming their entire business, but they had really carved out a niche in the market by this time.

In 1946, they started looking at offering a universal charge card, and after seeing Diners Club successfully start one in 1950, the first American Express charge cards were issued in 1957. This was around the time that Visa was starting to get off the ground as well, but unlike Visa, known as BankAmericard at the time, American Express stuck to the charge card format, and it wasn’t until much later that they issued their first credit card.

Today, American Express is considered to be one of the world’s top 25 most valuable brands, with over 100 million cards issued, and while they don’t have as many cards in circulation than their top 2 competitors Visa and MasterCard, the fact that the average spending on their cards exceeds $14,000 per year, over three times higher than their competitors, the total spending with American Express cards is second to none.

American Express Charge Cards

While they still issue traveler’s checks, the coming of charge and credit cards reduced the need for traveler’s checks, as nowadays one can just use a credit card when one visits other countries, which is more convenient. So once charge and credit cards became accepted worldwide, it’s just easier for people to put their expenses on their cards.

Some people still use traveler’s checks though and American Express has been the major player in this market ever since they introduced the first ones to the market in the 19th century, but nowadays the majority of their business does come from their cards.

In contrast to Visa and MasterCard, American Express both provides the credit and the processing services, where Visa and MasterCard only provide the processing, and the credit is borne by the individual issuing banks.

This is what makes American Express stand out the most from its major competitors Visa and MasterCard is the fact that American Express provides the financing for their card products directly, and therefore not only has full control over them but they are also poised to reap all the benefits from the use of their cards.

American Express is the world’s largest financial services company that is not a bank, an investment services company, or an insurance company. It’s been cards that has driven this success, and their brand is extremely well known and widely accepted around the world.

The original American Express charge card, issued in 1957, was made of paper, with the cardholder’s information typed upon it. American Express did introduce the world’s first plastic card though, in 1959, the standard that is used today.

The American Express Card Lineup

Given that for most of its history, American Express only offered charge cards, where the balance was to be paid in full every month or the cardholder would be in default, American Express had to rely on other means of making money from their cards than the usual interest that credit cards charge.

Charge cards are credit cards in the sense that they do offer credit, but only short term credit, as opposed to longer term financing arrangements that actual credit cards provide.

American Express is particularly famous for not only higher merchant fees but higher cardholder annual fees as well, which have always been the highest in the industry.

Still though, a lot of people eagerly applied for and used their cards, so it’s not that they overpriced their cards all that much, and many over the years have felt that their cards conveyed sufficient additional prestige to make the additional cost worth it.

When the American Express card, or Amex Card, first came out, Diners Club was charging an annual fee of $5 a year, so American Express decided to go one up and charge $6 a year for theirs. The idea here was to suggest that the Amex Card was more of a premium card, and this has been a strategy that they have stuck with ever since.

The American Express Gold Card soon followed, in 1966, which came with it a feeling of even more prestige. 1986 saw the Platinum Card introduced, with an even higher level of prestige, and an even higher annual fee, $250 a year, to go along with it.

1999 saw the introduction of the Centurion Card, also known as the black card, and this one was ultra-exclusive, with an annual fee of $2,500 in addition to requiring the payment of a $7,500 initiation fee up front.

Amex has further diversified their card offerings of late, although it wasn’t until 1987 that they offered their first actual credit card, the Oppima Card, where balances did not have to be paid off in full every month. It was clear that there was not only a market for this, but the market was a lot bigger than for charge cards, even though American Express has always dominated the charge card market and continues to do so today.

Not all Amex cards come with annual fees, although almost all of them do, but for those who do not wish to pay such fees, they now have cards which are available for no annual fee, to compete with other such cards in the market.

American Express also offers an assortment of business cards in addition to their consumer ones, and own a very good share of the business card market. The lineup of cards from Amex is very diversified and they have many different offerings today, targeting a number of different demographics and interests.

Using American Express Cards

It is actually pretty amazing that American Express has been so successful given that they tend to charge higher fees to both cardholders and merchants, but it’s all to do with the value of the brand that they have built up, as well as the skill of their marketing.

Their marketing skill may be said to be well superior to that of their competitors actually, and a lot of this has to do with the level of control they have over their cards, as opposed to a brand of card that is segmented across tens of thousands of banks that issue a given credit card brand.

American Express has also brought on other merchants, such as major hotel and airline chains, as well as other merchants, into a co-branding program with cards bearing the name of both the merchant and Amex, further extending their reach into these select markets.

In the same way that American Express has pushed the envelope on annual fees to their cardholders, they take the same strategy with the processing fees that they charge merchants. Many merchants refuse to accept Amex for this reason, and while this is always a balance between making their customers happy and paying the fees, many see the fees from Amex as being too high, and will risk losing a little business over this.

Still though, enough merchants in the United States, where about half of American Express cards are issued in, accept their cards that they are still pretty comfortable with their premium cards garnering premium merchant fees.

American Express cards are less accepted in many other countries though, much less so than MasterCard and Visa are, and both these competitors enjoy virtual worldwide acceptance, where this isn’t quite the case for Amex.

So travelers may want to carry other cards with them when they travel internationally, although this is a good idea even in the United States, where not all merchants accept American Express.

American Express has always been focused on niche markets, although lately with their expanded lineup of products they are certainly focused on a lot more markets than back in earlier times where they were mostly focused on premium charge cards and didn’t even offer credit cards at all.

This is a company that really does have their ear to the ground a lot more now though and they now cater to virtually everyone, from the very wealthy who want a card that speaks loudly of their success, to young people who want to enjoy credit with a premium brand at low cost, and everyone in between it seems.

American Express/Amex FAQs

  • What is American Express credit card?
    Unlike Visa and MasterCard, which are payment processors that banks use with their own credit cards, American Express is both a payment processor and a credit grantor. You borrow money and make payments directly to American Express instead of to your branded bank credit card.
  • Is American Express card worth it?
    American Express cards come with higher annual fees, but they also come with generous rewards. This comes down to how much you use it and whether or not the additional fees provide a net benefit overall. American Express cards are also felt to be more prestigious by some.
  • How do I get an American Express card?
    You need to first make sure that you have a reasonable chance of getting the American Express card you desire to apply for, including meeting minimum income requirements and ensuring your credit is in good standing. Applications can be made over the phone but applying online is quicker.
  • What is the easiest Amex card to get?
    Any Amex card can be obtained easily provided that you meet the minimum criteria of the card, which vary among card type. The USAA Amex Secured Card is by far the easiest to qualify for, provided that you or a family member has served in the military, where even bad credit is not an issue.
  • Is it hard to get Amex Platinum?
    Amex does not publish its minimum requirements for its Platinum card, but the bar is set higher than most credit cards. If your credit score is above 700 and your income is above $100k, you should have no problem. Those with lower but still decent credit scores or less income do get approved sometimes.
  • What is my AMEX credit limit?
    Unlike other credit cards, AMEX does not use pre-set credit limits, but determines a card holder’s limit on an ongoing basis based upon several factors including usage patterns. These cards do have limits but they just aren’t transparent. The only way to learn this is through trial and error.
  • Is American Express easy to get approved for?
    Generally speaking, American Express cards tend to be a little more difficult to get than most other cards, but not overly so. This is more a matter of your application being reasonably strong and then being matched to the card that American Express feels would be most appropriate for you.
  • Does AMEX help your credit score?
    Having any credit product and using it wisely can help your credit score, including Amex cards. They function differently than your normal credit card because they don’t have a preset credit limit and therefore credit utilization is not a factor. Paying it on time does help your credit though.
  • What are the benefits of having an Amex?
    Having no preset limit is seen as a benefit by many, especially in cases where an unusually large purchase needs to be made which other cards may not be able to accommodate. Amex also offers generous rewards and other benefits as well as a certain perceived level of prestige.
  • Is American Express better than Visa or MasterCard?
    The higher annual fees that American Express cards is often seen as a downside to their cards versus Visa and MasterCard cards. The rewards that American Express offers can make this worth it though. American Express is also less widely accepted than Visa and MasterCard.
Ken Stephens

Chief Editor, MarketReview.com

Ken has a way of making even the most complex of ideas in finance simple enough to understand by all and looks to take every topic to a higher level.

Contact Ken: ken@marketreview.com

Areas of interest: News & updates from the Federal Reserve System, Investing, Commodities, Exchange Traded Funds & more.

American Express - Best Amex Cards - Compare & Apply

American Express Credit Cards

American Express has a very long history, going all the way back to 1850, long before their credit cards ever hit the street. The name “express” comes from the fact that American Express got its start as an express mail company, coming into existence as a merger between express companies owned by Henry Wells, William Fargo, and John Butterfield.

Two years later, when American Express chose not to expand their operations into the state of California, Wells and Fargo started another company there, Wells Fargo, which eventually grew into a financial institution as well, and is one of the world’s largest banks, as well as playing a founding role in one of American Express’ current competitors in the credit card market, MasterCard.

American Express Credit CardsAmerican Express has always been based out of New York City, from its beginnings as an express company right up to the present day, where it has become one of the world’s leading financial institutions.

The financial services arm of the company started in 1857 when they got into the money order business, competing directly with the money orders from the U.S. Postal Service. American Express never shied away from taking on big competitors though.

In the late 1880’s, company president J.C. Fargo travelled to Europe, and in spite of his wealth and prominent position, and in spite of carrying letters of credit from the U.S., he had great difficulty obtaining funds at European banks. This spawned the idea of American Express Traveler’s Checks, launched in 1891, which are still offered today.

Eventually, American Express was forced out of the railway express business, and the financial end of their business ended up becoming their entire business, but they had really carved out a niche in the market by this time.

In 1946, they started looking at offering a universal charge card, and after seeing Diners Club successfully start one in 1950, the first American Express charge cards were issued in 1957. This was around the time that Visa was starting to get off the ground as well, but unlike Visa, known as BankAmericard at the time, American Express stuck to the charge card format, and it wasn’t until much later that they issued their first credit card.

Today, American Express is considered to be one of the world’s top 25 most valuable brands, with over 100 million cards issued, and while they don’t have as many cards in circulation than their top 2 competitors Visa and MasterCard, the fact that the average spending on their cards exceeds $14,000 per year, over three times higher than their competitors, the total spending with American Express cards is second to none.

American Express Charge Cards

While they still issue traveler’s checks, the coming of charge and credit cards reduced the need for traveler’s checks, as nowadays one can just use a credit card when one visits other countries, which is more convenient. So once charge and credit cards became accepted worldwide, it’s just easier for people to put their expenses on their cards.

Some people still use traveler’s checks though and American Express has been the major player in this market ever since they introduced the first ones to the market in the 19th century, but nowadays the majority of their business does come from their cards.

In contrast to Visa and MasterCard, American Express both provides the credit and the processing services, where Visa and MasterCard only provide the processing, and the credit is borne by the individual issuing banks.

This is what makes American Express stand out the most from its major competitors Visa and MasterCard is the fact that American Express provides the financing for their card products directly, and therefore not only has full control over them but they are also poised to reap all the benefits from the use of their cards.

American Express is the world’s largest financial services company that is not a bank, an investment services company, or an insurance company. It’s been cards that has driven this success, and their brand is extremely well known and widely accepted around the world.

The original American Express charge card, issued in 1957, was made of paper, with the cardholder’s information typed upon it. American Express did introduce the world’s first plastic card though, in 1959, the standard that is used today.

The American Express Card Lineup

Given that for most of its history, American Express only offered charge cards, where the balance was to be paid in full every month or the cardholder would be in default, American Express had to rely on other means of making money from their cards than the usual interest that credit cards charge.

Charge cards are credit cards in the sense that they do offer credit, but only short term credit, as opposed to longer term financing arrangements that actual credit cards provide.

American Express is particularly famous for not only higher merchant fees but higher cardholder annual fees as well, which have always been the highest in the industry.

Still though, a lot of people eagerly applied for and used their cards, so it’s not that they overpriced their cards all that much, and many over the years have felt that their cards conveyed sufficient additional prestige to make the additional cost worth it.

When the American Express card, or Amex Card, first came out, Diners Club was charging an annual fee of $5 a year, so American Express decided to go one up and charge $6 a year for theirs. The idea here was to suggest that the Amex Card was more of a premium card, and this has been a strategy that they have stuck with ever since.

The American Express Gold Card soon followed, in 1966, which came with it a feeling of even more prestige. 1986 saw the Platinum Card introduced, with an even higher level of prestige, and an even higher annual fee, $250 a year, to go along with it.

1999 saw the introduction of the Centurion Card, also known as the black card, and this one was ultra-exclusive, with an annual fee of $2,500 in addition to requiring the payment of a $7,500 initiation fee up front.

Amex has further diversified their card offerings of late, although it wasn’t until 1987 that they offered their first actual credit card, the Oppima Card, where balances did not have to be paid off in full every month. It was clear that there was not only a market for this, but the market was a lot bigger than for charge cards, even though American Express has always dominated the charge card market and continues to do so today.

Not all Amex cards come with annual fees, although almost all of them do, but for those who do not wish to pay such fees, they now have cards which are available for no annual fee, to compete with other such cards in the market.

American Express also offers an assortment of business cards in addition to their consumer ones, and own a very good share of the business card market. The lineup of cards from Amex is very diversified and they have many different offerings today, targeting a number of different demographics and interests.

Using American Express Cards

It is actually pretty amazing that American Express has been so successful given that they tend to charge higher fees to both cardholders and merchants, but it’s all to do with the value of the brand that they have built up, as well as the skill of their marketing.

Their marketing skill may be said to be well superior to that of their competitors actually, and a lot of this has to do with the level of control they have over their cards, as opposed to a brand of card that is segmented across tens of thousands of banks that issue a given credit card brand.

American Express has also brought on other merchants, such as major hotel and airline chains, as well as other merchants, into a co-branding program with cards bearing the name of both the merchant and Amex, further extending their reach into these select markets.

In the same way that American Express has pushed the envelope on annual fees to their cardholders, they take the same strategy with the processing fees that they charge merchants. Many merchants refuse to accept Amex for this reason, and while this is always a balance between making their customers happy and paying the fees, many see the fees from Amex as being too high, and will risk losing a little business over this.

Still though, enough merchants in the United States, where about half of American Express cards are issued in, accept their cards that they are still pretty comfortable with their premium cards garnering premium merchant fees.

American Express cards are less accepted in many other countries though, much less so than MasterCard and Visa are, and both these competitors enjoy virtual worldwide acceptance, where this isn’t quite the case for Amex.

So travelers may want to carry other cards with them when they travel internationally, although this is a good idea even in the United States, where not all merchants accept American Express.

American Express has always been focused on niche markets, although lately with their expanded lineup of products they are certainly focused on a lot more markets than back in earlier times where they were mostly focused on premium charge cards and didn’t even offer credit cards at all.

This is a company that really does have their ear to the ground a lot more now though and they now cater to virtually everyone, from the very wealthy who want a card that speaks loudly of their success, to young people who want to enjoy credit with a premium brand at low cost, and everyone in between it seems.

American Express/Amex FAQs

  • What is American Express credit card?
    Unlike Visa and MasterCard, which are payment processors that banks use with their own credit cards, American Express is both a payment processor and a credit grantor. You borrow money and make payments directly to American Express instead of to your branded bank credit card.
  • Is American Express card worth it?
    American Express cards come with higher annual fees, but they also come with generous rewards. This comes down to how much you use it and whether or not the additional fees provide a net benefit overall. American Express cards are also felt to be more prestigious by some.
  • How do I get an American Express card?
    You need to first make sure that you have a reasonable chance of getting the American Express card you desire to apply for, including meeting minimum income requirements and ensuring your credit is in good standing. Applications can be made over the phone but applying online is quicker.
  • What is the easiest Amex card to get?
    Any Amex card can be obtained easily provided that you meet the minimum criteria of the card, which vary among card type. The USAA Amex Secured Card is by far the easiest to qualify for, provided that you or a family member has served in the military, where even bad credit is not an issue.
  • Is it hard to get Amex Platinum?
    Amex does not publish its minimum requirements for its Platinum card, but the bar is set higher than most credit cards. If your credit score is above 700 and your income is above $100k, you should have no problem. Those with lower but still decent credit scores or less income do get approved sometimes.
  • What is my AMEX credit limit?
    Unlike other credit cards, AMEX does not use pre-set credit limits, but determines a card holder’s limit on an ongoing basis based upon several factors including usage patterns. These cards do have limits but they just aren’t transparent. The only way to learn this is through trial and error.
  • Is American Express easy to get approved for?
    Generally speaking, American Express cards tend to be a little more difficult to get than most other cards, but not overly so. This is more a matter of your application being reasonably strong and then being matched to the card that American Express feels would be most appropriate for you.
  • Does AMEX help your credit score?
    Having any credit product and using it wisely can help your credit score, including Amex cards. They function differently than your normal credit card because they don’t have a preset credit limit and therefore credit utilization is not a factor. Paying it on time does help your credit though.
  • What are the benefits of having an Amex?
    Having no preset limit is seen as a benefit by many, especially in cases where an unusually large purchase needs to be made which other cards may not be able to accommodate. Amex also offers generous rewards and other benefits as well as a certain perceived level of prestige.
  • Is American Express better than Visa or MasterCard?
    The higher annual fees that American Express cards is often seen as a downside to their cards versus Visa and MasterCard cards. The rewards that American Express offers can make this worth it though. American Express is also less widely accepted than Visa and MasterCard.
Ken Stephens

Chief Editor, MarketReview.com

Ken has a way of making even the most complex of ideas in finance simple enough to understand by all and looks to take every topic to a higher level.

Contact Ken: ken@marketreview.com

Areas of interest: News & updates from the Federal Reserve System, Investing, Commodities, Exchange Traded Funds & more.