How Does an American Express Card Work?

How Does an American Express Card Work?

Credit Offered

When a customer applies for a card, American Express makes a direct offer of credit. The credit line is directly from American Express and does not come through a bank or other financial institution like other credit cards. The company has a number of different American Express card programs, some that focus on low or no fees and others that offer special rewards like airline miles and cash back.

Charges Made

When a customer uses an American Express card to make a purchase, the store or company where the purchase is made sends the transaction directly to American Express. The store is then paid directly by American Express for the amount charged by the customer, minus any processing fees incurred by the store. Most other card services simply process the charge through to the bank, and the bank pays the store for the service or merchandise.


Customers make direct payment to American Express after making a charge. Most of the company's card types offer a grace period where no fees or interest are charged, but generally fees and interest are added to the bill. Unlike most other credit card companies, American Express bills and collects from the customer directly, and not through a bank or financial institution. Also, in general, American Express requires larger minimum payments than other card companies, which ensures that the balance will be paid off fairly quickly.