# American Express Card: Types, Benefits, and Fees Explained

![Woman making online purchase with credit card and a cup in her hand](https://www.investopedia.com/thmb/PhJsR8rLcsKRWhVKVDz7J1R-OpQ=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/AmericanExpressCardAmExCardDefinitionTypesandFees-94019cef8fbc4cc1b145dafc6ffb1e16.jpg)

*— Boris Jovanovic / Getty Images*

## What Is an American Express Card?

An American Express card, commonly known as an "Amex" card, offers various types of electronic payment cards, including credit, charge, and prepaid options. As a leader in financial services, American Express ([AXP](https://www.investopedia.com/markets/quote?tvwidgetsymbol=AXP)) provides these cards to individuals, small businesses, and corporations globally. Along with unique advantages such as rewards points, cash back, and travel perks, Amex cards are notable for being issued and processed by their own network—a feature that sets them apart from competitors like Visa and Mastercard.

### Key Takeaways

*   American Express is both a card issuer and a processing network, which distinguishes it from competitors like Visa and Mastercard.
*   Amex cards, including charge, credit, and prepaid options, provide various benefits such as rewards points, but often come with high annual fees.
*   Known for excellent customer service, American Express ranked first in J.D. Power's 2020 U.S. Credit Card Satisfaction Study.
*   Merchant acceptance of Amex cards may be limited due to higher transaction fees compared to other card networks.
*   Amex requires cardholders to have a good credit score of 670 or higher, ensuring high-quality lending.

## How American Express Cards Work

American Express not only issues its own cards but also processes payments through its network. Few financial service companies do both.

American Express is a [publicly traded company](https://www.investopedia.com/terms/p/publiccompany.asp) in the financial services industry. It offers both credit lending and network processing services, giving it a broad range of [competitors in the industry](https://www.investopedia.com/articles/personal-finance/051415/american-expresss-main-competition.asp). As with traditional lenders, it has the capability to issue credit products, which it provides in the form of charge cards and credit cards.

American Express has its own processing network that competes with [Mastercard](https://www.investopedia.com/terms/m/mastercard-card.asp) ([MA](https://www.investopedia.com/markets/quote?tvwidgetsymbol=MA)) and [Visa](https://www.investopedia.com/terms/v/visa-card.asp) ([V](https://www.investopedia.com/markets/quote?tvwidgetsymbol=V)). Its most comparable competitor is [Discover](https://www.investopedia.com/terms/d/discover-card.asp) Financial Services ([DFS](https://www.investopedia.com/markets/quote?tvwidgetsymbol=DFS)), which is also a publicly traded financial service company offering both credit lending and a processing service network. With multiproduct capabilities, [American Express generates revenue](https://www.investopedia.com/articles/markets/012715/how-american-express-makes-its-money.asp) from both interest-earning products and network processing transaction services.

> **Important**
>
> The term “Black Card” refers to the American Express Centurion card, which is offered by invitation only.

## Fees Associated With American Express Cards

American Express makes much of its revenue from transaction processing. Many merchants accept these cards and pay the fees because of the benefits they provide to customers.

In an American Express transaction, the acquiring bank works with American Express, which acts as both the processor and issuer. Merchant acquiring banks must work with the American Express processing network to transmit communications in American Express transactions. American Express is also the issuer that authenticates and approves the transaction. 

Merchants pay a small fee to American Express for its processing network services, which are part of the comprehensive fees involved with a single transaction. As both a processor and high-quality lender, American Express has built a strong reputation in the financial services industry.

## Different Types of American Express Cards Explained

As noted above, American Express credit cards and prepaid debit cards are offered to a variety of both retail and commercial customers. It is also an industry-leading provider of charge cards, which offer month-to-month credit with card balances that must be paid off each month.

American Express charge and credit cards follow standard [underwriting](https://www.investopedia.com/terms/u/underwriting.asp) procedures. The company seeks good- to high-credit quality borrowers—which means a [credit score](https://www.investopedia.com/terms/c/credit_score.asp) of at least 670—and generally is not a [subprime lender](https://www.investopedia.com/terms/s/subprimelender.asp).

American Express credit and charge cards offer rewards points and travel perks, varying based on the annual fee. American Express cards may offer cash back on certain purchases, though they aren’t among the best cash back cards currently available. American Express also offers numerous branded prepaid debit cards, which can be used as gift cards or special-purpose reloadable payment cards.

American Express card annual fees vary: $95 for Blue Cash Preferred, $325 for Gold, and $695 for Platinum. That said, the Green, Gold, and Platinum cards have no predetermined spending limits. American Express does offer at least six cards with no annual fee. Customer service for all Amex cards is highly rated, with the company coming in No. 1 on J.D. Power’s 2020 U.S. Credit Card Satisfaction Study.

### American Express Partnerships and Co-Branded Card Options

American Express issues its cards directly and through partners like Wells Fargo in the U.S. and Banco Santander in Mexico. Note that Wells Fargo paused new applications in April 2021, but current cardholders are unaffected.

American Express partners with companies to encourage credit card applications, like with Delta Air Lines for frequent flier miles and Hilton Hotels for other rewards.

## Advantages and Disadvantages of American Express Cards

Pros

*   Green, Gold, and Platinum Amex cards don’t have any predetermined spending limits.
    
*   Amex is known for the high quality of its customer service, ranking number one in J.D. Power’s 2020 U.S. Credit Card Satisfaction Study.
    
*   Amex cards offer a host of rewards, perks, and cash back on purchases.
    
*   You must pay the balance on Amex charge cards in full each month, which prevents you from running up high interest charges.
    

Cons

*   Due to higher transaction fees than other cards, some merchants won’t accept Amex cards.
    
*   You can’t get an Amex card without at least a good (670 or higher) credit score.
    
*   Annual fees for Amex cards can be high.
    
*   You must pay the balance on Amex charge cards in full each month, so you can’t use them to “borrow” money.
    

## The Bottom Line

American Express (AmEx) cards are known for their unique benefits, such as rewards points, travel perks, and high-quality customer service. While they come with higher transaction fees and sometimes substantial annual fees, they are a preferred choice for individuals with good to high credit scores who can take advantage of the various perks offered.

AmEx stands out as one of the few financial companies that operates both as an issuer and a network processor, allowing it to offer a comprehensive range of services to cardholders. Despite limited acceptance in some places due to higher fees, their co-branded partnerships with companies like Delta and Hilton provide added value. Overall, American Express cards offer a strong combination of features for those who qualify.

> **Article Sources**
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>     
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>      
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>      
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