How is american express different from other credit cards

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We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. The primary drawback of American Express cards is the fact that they charge companies for the payments that they process.

This is because they have their own payment network and don't rely on companies like Visa and Mastercard. This means that some businesses, especially smaller ones, may not accept American Express. In other cases, such as online shopping, you may have to pay a little bit extra in order to use one. Another thing to be aware of is that American Express' additional extras often only last for a limited period.

This means that you won't be able to enjoy the benefits of things like Airmiles or cashback for that long. Most of these offers are introductory offers that expire after a certain amount of time. Some of the offers do last beyond an introductory period but there are often minimum spends that are required in order to qualify for them. Essentially when taking out an American Express card with nice introductory offers you should bear in mind that after these offers expire the card acts just like a normal credit card.

This means that with the higher fees that they charge, you could end up paying more for the card than you save with the offers. When considering an American Express card it is important to be aware of how you are going to use it and if you are going to get your money's worth out of the extras it offers. If you get an American Express that comes with car insurance, you will only benefit from this if you don't already have car insurance taken out.

Here is a list of our partners and here's how we make money. Discover and American Express are different from Visa and Mastercard in a very important way. Visa and Mastercard process credit card transactions, but they don't actually issue credit cards. Your card might say "Visa" or "Mastercard" on it, but it is issued by a bank, like Chase or Citi.

You don't have an account with Visa or Mastercard. You have an account with the bank, which sends you your statement, receives your payments, gives you rewards and so on. Discover and American Express, by contrast, process transactions and issue their own cards. You can have an account with Discover or an account with American Express. None of this matters much to most consumers. The difference is mostly invisible as far as the cardholder is concerned.

But it's a big deal behind the scenes, where it affects how credit card transactions are handled and how fees generated by those transactions are paid and received. By issuing credit cards as well as processing transactions, Discover and American Express can get a bigger cut of that fee revenue. When you use a credit card, there are several steps between your card going through the reader and the charge showing up on your statement. These steps, many of which are instantaneous, involve multiple parties, including you.

The participants in a typical transaction are:. The cardholder.