American Express is a card issuer and payment network combined into one company
Most credit cards are issued by a bank — like Chase or Capital One — but the card runs on a separate payment network like Visa or Mastercard. American Express works differently. Amex both issues the card and operates the network that processes the transaction. When you swipe an Amex card, the payment goes directly to American Express, not through a middleman network.
This structure affects how the card works in practice. Amex sets its own rules about which merchants accept the card, what fees merchants pay, and what rewards or protections cardholders receive. You cannot use an Amex card everywhere Visa and Mastercard are accepted, because Amex has not negotiated with every merchant. Historically, Amex charged merchants higher fees, which is why some smaller businesses did not accept it. That gap has narrowed in recent years, but it still exists.
The card itself functions like any other credit card: you charge purchases, receive a monthly bill, and pay interest on any balance you do not pay in full. The difference is in the backend — who owns the network, who sets the rules, and how the company makes money.
Key Takeaways
- American Express issues its own cards and runs its own payment network, unlike Visa and Mastercard which are networks that banks use.
- Not all merchants accept Amex because the company negotiates directly with each business, and historically charged higher processing fees.
- Amex cards typically come with higher annual fees than competing cards, but often include travel protections and purchase protections as standard.
- Amex reports your payment history to the three credit bureaus, so using the card responsibly builds your credit score the same way other cards do.
How Amex charges merchants and why some stores do not accept it
American Express charges merchants a processing fee every time someone uses an Amex card — typically between 2.5% and 3.5% of the transaction amount, depending on the card type and the merchant's agreement. Visa and Mastercard charge lower fees, usually between 1.5% and 2.5%. That difference adds up for high-volume businesses, which is why some retailers have historically refused Amex or charged customers extra to use it.
Amex has been lowering its fees in recent years to compete, and acceptance has grown. Most major retailers, restaurants, and online merchants now accept Amex. But small independent shops, some gas stations, and certain regional businesses may still decline it. Before opening an Amex account, check whether the merchants you use most often accept it.
The higher fees Amex charges merchants are one reason Amex cardholders often receive richer rewards and protections. The company keeps more revenue per transaction and can afford to offer better benefits. This is a trade-off: you pay a higher annual fee, but you get more in return.
Annual fees and what they cover
Most American Express cards charge an annual fee, ranging from $95 to $695 or more depending on the card. Visa and Mastercard cards often have no annual fee. Amex justifies the fee by bundling protections and benefits that would otherwise cost you money if you bought them separately.
A typical mid-tier Amex card might include trip cancellation insurance, lost luggage reimbursement, rental car damage coverage, emergency medical and dental coverage abroad, and purchase protection that covers items you buy against theft or damage for a set period. These protections have real value if you travel or make large purchases. If you never travel and pay cash for everything, the annual fee may not be worth it.
Some Amex cards offer statement credits that offset the annual fee — for example, a $200 annual fee card might include a $100 airline credit and a $100 dining credit, reducing your net cost to zero if you use those benefits. Read the card's benefits guide to see whether the protections and credits match your spending habits.
How Amex reports to credit bureaus and affects your credit score
American Express reports your account activity to Equifax, Experian, and TransUnion — the three major credit bureaus — just like any other credit card issuer. Your payment history, credit limit, and balance all factor into your credit score the same way they would with a Visa or Mastercard.
Opening an Amex account triggers a hard inquiry, which temporarily lowers your score by a few points. Carrying a high balance relative to your credit limit (high utilization) hurts your score whether the card is Amex or not. Paying on time every month helps your score. Amex does not treat credit differently — the mechanics are identical.
One difference: Amex historically did not report to credit bureaus for some of its charge cards, which are different from credit cards. A charge card requires you to pay the full balance each month and does not carry interest. If you use a charge card, it may not build credit history the way a traditional credit card does. Check the specific card's terms to know whether it reports to the bureaus.
Amex rewards and how they work
American Express cards typically offer rewards in the form of points or cash back. The structure varies by card. Some cards earn a flat rate — for example, 1.5% cash back on all purchases. Others earn bonus rates in specific categories: 3% on dining, 2% on travel, 1% on everything else. A few premium cards offer even higher rates in rotating categories.
You accumulate points or cash back with every purchase, and you can redeem them for statement credits, travel bookings, gift cards, or merchandise. Some cards let you transfer points to airline or hotel partners at a fixed rate. The redemption value varies — sometimes a point is worth less than a cent, sometimes more, depending on how you redeem it.
Amex also runs periodic bonus offers: spend $5,000 in the first three months and earn 50,000 bonus points, for example. These bonuses can be substantial, but they require you to meet a spending threshold in a set timeframe. If you cannot meet the threshold naturally, the bonus may not be worth chasing.
How to pay your Amex bill and what happens if you miss a payment
You can pay your Amex bill online through the Amex website or app, by phone, by mail, or through automatic payments. The due date appears on your statement, usually 20 to 25 days after the statement closes. Amex charges interest on any balance you do not pay in full — the rate varies by card and your creditworthiness, but typically ranges from 15% to 25% APR.
If you miss a payment, Amex reports it to the credit bureaus after 30 days. A single late payment can lower your credit score by 100 points or more. If you miss a payment by 60 days, Amex may close your account and send the debt to a collection agency. If you are struggling to pay, contact Amex directly — the company sometimes offers hardship programs that lower your interest rate or allow you to pause payments temporarily.
Amex also has the right to lower your credit limit or close your account if you do not use it for an extended period. Unlike some card issuers, Amex is more likely to take action on inactive accounts. If you open an Amex card, use it occasionally even if you have other cards you prefer.
Amex business cards and how they differ from personal cards
American Express offers business credit cards for sole proprietors, partnerships, and corporations. Business cards work the same way as personal cards — you charge purchases, receive a bill, and pay interest on unpaid balances. The main differences are in the rewards structure and the reporting.
Business cards typically offer higher rewards rates in business-related categories like office supplies, internet, and phone service. Some business cards do not report to personal credit bureaus, which means they do not affect your personal credit score. However, if you are a sole proprietor or small business owner, Amex may still require a personal may provide, meaning you are personally liable if the business does not pay.
Business cards also come with higher annual fees and higher credit limits than personal cards. If you run a business and charge significant expenses, a business card can earn rewards faster than a personal card. But if you are self-employed and use the card for personal expenses too, a personal card may be simpler.
Frequently Asked Questions
Can I use my Amex card everywhere?
No. While Amex acceptance has grown significantly, some smaller merchants, gas stations, and regional businesses still do not accept it. Check with the merchants you use most before opening an account. Major retailers, restaurants, airlines, and hotels almost always accept Amex.
What is the difference between an Amex credit card and a charge card?
A credit card lets you carry a balance and pay interest. A charge card requires you to pay the full balance each month. Charge cards typically have no preset spending limit and higher annual fees, but they do not report to credit bureaus in the same way. Choose based on whether you want the flexibility to carry a balance.
Does Amex offer a card with no annual fee?
Yes, but it is less common than with Visa or Mastercard. Amex offers a few no-annual-fee cards, though they typically have lower rewards rates and fewer protections than cards with annual fees. Compare the rewards and benefits to see whether a no-fee card makes sense for your spending.
What happens if I close my Amex account?
Closing the account stops you from using the card, but you still owe any outstanding balance. The closed account remains on your credit report for up to seven years, which can slightly lower your credit score because it reduces your total available credit. Pay off the balance before closing if possible.
Can I transfer my Amex balance to another card?
Yes, you can do a balance transfer to another card issued by a different company. However, Amex does not offer balance transfer options to move debt from other cards onto an Amex card. If you want to move an Amex balance elsewhere, contact the other card issuer to start the transfer process.