What American Express Is and How Its Cards Work

American Express is a payment card company that issues its own cards and runs its own payment network

American Express (often called Amex) is both a card issuer and a payment network — meaning it creates the cards, sets the rules for how they work, and operates the system that processes the transactions. This is different from Visa or Mastercard, which are networks that other banks use to issue cards. When you use an American Express card, the transaction runs through American Express's own system.

American Express offers several types of cards for different purposes: personal credit cards, business credit cards, charge cards (which require you to pay the full balance each month), and prepaid cards. Each type works differently and comes with different fees and rewards structures.

The company was founded in 1850 as an express mail and shipping business and moved into financial services over time. Today it is one of the largest payment card companies in the world, though it has fewer locations that accept it compared to Visa or Mastercard, especially outside the United States.

Key Takeaways

• American Express issues its own cards and operates its own payment network, unlike Visa or Mastercard which are networks that banks use.
• Amex cards typically come with higher annual fees than other credit cards but often include more rewards points and travel benefits.
• Not all merchants accept American Express, so you may need a backup card when shopping at smaller stores or internationally.
• American Express charge cards require you to pay your full balance each month, while their credit cards let you carry a balance and pay interest.

How American Express cards differ from Visa and Mastercard

The main difference is structural: Visa and Mastercard are networks that issue rules and process payments, but they do not issue cards themselves. Banks like Chase or Bank of America issue Visa and Mastercard cards on their behalf. American Express does both — it issues the card and runs the network.

This means American Express has more control over the terms of its cards. It sets the rewards rates, the annual fees, the spending limits, and the customer service standards directly. You deal with American Express itself, not with a bank that happens to issue an Amex card.

Another practical difference: American Express cards are accepted at fewer places than Visa or Mastercard. Large retailers, restaurants, and gas stations almost always take Amex, but small independent shops, some international merchants, and certain online vendors may not. Before opening an Amex card, check whether the places you shop most often accept it.

Types of American Express cards and what they cost

American Express offers several card categories. Personal credit cards let you carry a balance month to month and pay interest on what you owe. These typically charge annual fees ranging from $0 to several hundred dollars, depending on the card's benefits. Cards with no annual fee exist but offer fewer rewards; premium cards with $95, $150, or higher annual fees include travel credits, lounge access, and higher rewards rates.

Charge cards require you to pay your entire statement balance in full each month — you cannot carry a balance. These cards often have higher annual fees ($95 to $550) but come with premium benefits like travel insurance, concierge services, and high rewards rates. They are designed for people who pay off their cards completely each month anyway.

Business cards work similarly to personal cards but are designed for business owners and include features like employee cards, detailed spending reports, and business-specific rewards. Prepaid cards are loaded with money upfront and work like a debit card — you can only spend what you have loaded onto the card.

How American Express rewards and benefits work

Most American Express cards earn rewards points on purchases. The number of points per dollar spent varies by card and by category. For example, one card might earn 3 points per dollar on flights and hotels, 1 point per dollar on everything else. Another might earn 2 points per dollar on groceries and gas, 1 point on other purchases.

You redeem these points for statement credits, travel bookings, gift cards, or merchandise. Some cards let you transfer points to airline or hotel loyalty programs. The value of each point depends on how you use it — a point used for a statement credit might be worth less than a point transferred to an airline program.

Premium American Express cards also include benefits beyond points: airline fee credits (which reimburse you for baggage fees or seat upgrades up to a certain amount each year), hotel elite status, lounge access at airports, travel insurance, and concierge services. These benefits are meant to offset the annual fee for people who travel frequently or spend heavily on the card.

Annual fees and when they make sense

Most American Express cards charge an annual fee. Cards with no annual fee exist but offer basic rewards and few extra benefits. Cards with annual fees typically range from $95 to $550 per year.

Whether an annual fee is worth it depends on how much you use the card and whether you use the benefits. If a card charges $95 per year but includes a $100 airline fee credit and you actually use that credit, you are ahead by $5 before you even earn rewards points. If you do not travel and do not use the benefits, the fee is pure cost.

Read the benefits section of any card you are considering and ask yourself honestly whether you will use them. Many people pay annual fees for benefits they never claim. If you do not travel, do not need lounge access, and do not have airline fees, a no-annual-fee card or a card from another issuer may be a better fit.

Where American Express cards are accepted

American Express acceptance has grown significantly in recent years, but it is still not universal. Most major retailers, restaurants, hotels, airlines, and online merchants accept Amex. Gas stations, grocery stores, and pharmacies almost always take it.

Where you may run into problems: small independent shops, some local restaurants, certain international merchants (especially outside North America), and a few online vendors. Some merchants accept Amex but charge a higher fee to the business, so they may discourage its use or offer a discount for cash or other payment methods.

Before opening an American Express card as your primary card, check the merchants you use most often. You can call the store or check their website. Many people keep an American Express card for everyday use and a Visa or Mastercard as a backup for places that do not take Amex.

How to use an American Express card

Using an American Express card works the same way as any other credit card. You present it at checkout (in person, online, or over the phone), the merchant processes it through the American Express network, and the charge appears on your statement.

If you have a credit card, you receive a monthly statement showing all your charges. You can pay the minimum amount due, pay in full, or pay any amount in between — though paying only the minimum means you will owe interest on the remaining balance. If you have a charge card, you must pay the full balance by the due date each month.

You can manage your account online or through the American Express mobile app. You can view your balance, make payments, dispute charges, set up alerts, and track your rewards points. American Express customer service is available by phone 24/7.

Frequently Asked Questions

Do I need good credit to get an American Express card?

Most American Express cards require good to excellent credit, typically a credit score of 670 or higher. Some cards are designed for people building credit, but these are less common than Amex's premium offerings. Check the specific card's requirements before you start.

Can I use my American Express card internationally?

Yes, American Express cards work in most countries, but acceptance is lower outside North America and Europe. Carry a backup Visa or Mastercard when traveling internationally. American Express charges a foreign transaction fee (usually 2% to 3%) on purchases made outside the United States, though some premium cards waive this fee.

What happens if a merchant does not take American Express?

You will need to use a different payment method — another credit card, debit card, or cash. This is why many American Express cardholders keep a Visa or Mastercard as a backup. Check merchant policies before you rely on Amex as your only card.

How do I redeem my American Express rewards points?

Log into your American Express account online or through the app and go to the rewards section. You can redeem points for statement credits, travel bookings, gift cards, merchandise, or transfers to airline and hotel programs. The redemption options vary by card.

Is American Express a bank?

American Express is a financial services company, not a traditional bank. It issues cards and processes payments but does not offer checking accounts or savings accounts like a bank does. Some American Express products are issued in partnership with banks, but Amex itself is a card and payment company.