How does Amex the company make money on these cards if people have to pay them in full at the end of the month?

I understand that there are annual fees involved, probably merchant fees as well. Also, I understand they have other cards that you pay over time (with interest).

Furthermore, Amex has a travel company in addition to other financial entities. However, can the 'green', pay-in-full card really add that much to the bottom line?

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Jennifer
90 350sdl

Maybe it's a way to get people in the door for their other services? I don't really know much about them. I did have an American Express Corporate card at my last job that I had to use for travel. I never had any other experience with them though.

Scott

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Scott
1982 Mercedes 240D, 4 speed, 275,000
1988 Porsche 944 Turbo S (70,000)
1987 Porsche 911 Coupe 109,000 (sold)
1998 Mercedes E300 TurboDiesel 147,000 (sold)
1985 Mercedes 300D 227,000 (totaled by inattentive driver with no insurance!)
1997 Mercedes E300 Diesel 236,000 (sold)
1995 Ducati 900SS (sold)
1987 VW Jetta GLI 157,000 (sold)
1986 Camaro 125,000 (sold - P.O.S.)
1977 Corvette L82 125,000 (sold)
1965 Pontiac GTO 15,000 restored (sold)

Don't they charge merchants for accepting their cards? Some kind of fee? Also there is an annual fee on some of their cards for the consumer.

Most retailers already know that Amex takes a higher percentage fee than Visa, MasterCard, etc. Yes, there are annual membership fees for the standard cards (Green, Gold, Platinum, Centurion), but not for the revolving credit ones, like Blue or Optima.

Amex charges merchants 2-3% of the amount charged, they've usually got the highest merchant fees out there (that's why some merchants, in the Visa commercials, "don't take American Express"). They also have a large and growing credit card (vs. charge card) business, the Amex Optima card, where you can run up a balance at the usual usurious interest rates. They make money on travelers checks as well, both on the fees they charge as well as on the float (they collect interest on the money you paid them for the check during the period between when you buy the check and when you use it). Amex has a number of other businesses as well, but that's how they make money on the traditional ones.

i still wonder why anyone would carry the amex card if you you avoid the annual fees with a visa card. pizzazz maybe. pizzazz is expensive isn't it?

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Jennifer
90 350sdl

Amex started off as a business, rather than consumer, card. Lots of businesses issue corporate AmEx cards to their employees. Amex has programs that make it easy for companies to issue multiple cards (with different spending limits), with excellent reporting for business expenses. It also has a decent number of perks (e.g. rental car insurance). Diner's Club was the same. Visa and MasterCard have adopted a lot of the Amex features, but they still aren't as focused on marketing to businesses or delivering business-friendly features.

Also, some people like the discipline of paying off their cards at the end of the month, and Visa/MC issuers didn't start waiving their annual fees until a few years ago.

This week American Express announced that it was spinning off it's Financial Advisor business to concentrate on the credit card business.

I think the idea is you don't have to carry a wad of Ben Franklin’s through the Italian countryside to pay for your room with a view of the Adriatic Sea and the bill plus shipping on your new Maserati.
Or just to the far end of your hood, to pick up that big screen TV. At the same time you know that if you put it on your Visa card you'll end up paying interest, or maybe you're already maxed out. You just need to have that TV for the Superbowl and payday is on Monday. On top of it all you’ll have earned a trip back to Italy next year.

Once you get a niche that big it takes a long time to die. Look how long it took AT&T.

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-Marty

1986 300E 220,000 miles+ transmission impossible
(Now waiting under a bridge in order to become one)

Reading your M103 duty cycle:
http://www.peachparts.com/shopforum/831799-post13.html
http://www.peachparts.com/shopforum/831807-post14.html

Amex works for me, as I have to pay it off every month.

If you don't have the discipline to pay your Visa off every month, you get nailed.

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Enough about me, how are you doing?

Yep, its the cache of carrying an Amex card. But, these people who carry such a card are not simply content to carry the plain, green Amex card for $50.00 or so. No sir. They need to have the Amex gold card for something like $100.00 per year. They get a few perks for this extortion, however, so they don't feel so bad.

I never had an Amex card for 20 years. However, I recently got one that credits the Delta Airlines Sky Miles account. Delta has one of the better programs and they have more seats and service where I need to go. The mileage programs all charge for the cards, whether it be Amex or Visa.

The Amex no fixed credit limit works for me, as does their Rewards program that allows you to convert points to miles on most airlines, not just the one branded on the card.

I have an American Express card and it works no differently than my Mastercard. No annual fee, a reasonable rate, and I can pay it off or not every month as I please. Nothing very special about them, really.

I had an AX card for years, and thought a lot about drop, or don't drop. Finally dropped about 5 years ago. Just realized I have not thought about it until this post. I.E., I did not need it or miss it. Others may disagree.

Mark

There's a saying in the restaurant industry. The surest way to go out of business is to accept Amex.

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You don't need a weatherman to know which way the wind blows - Robert A. Zimmerman