Skip to Content

What’s Bad About American Express? The Downsides of AmEx

What’s Bad About American Express? The Downsides of AmEx

American Express is a well-known financial institution that millions have trusted for their banking and credit card needs for over 100 years. However, there are some significant disadvantages to American Express (also often called AmEx, for short). These disadvantages have left both customers and retailers hesitant to use their services. This has caused potential and current consumers to ask: what’s bad about American Express?

American Express is not trusted by some retailers and consumers for several reasons, including:

Let’s discuss the drawbacks of American Express and why you may want to be wary of this financial institution for your credit card needs.

Many Retailers Do Not Accept American Express

Unlike the more ubiquitous Visa and MasterCard, American Express is not as universally accepted by most retailers. This tends to be because of AmEx’s famously high merchant charges. All credit card companies charge merchant fees to businesses. Merchant fees are the fees charged by the financial institution for each credit card transaction.

For some merchants, the cost of accepting American Express credit cards is not worth the hefty fee they incur for each transaction. Because of this, they refuse AmEx cards altogether and only accept the lower-fee cards, like Visa.

This limits where AmEx customers can use their cards, and subsequently where they can gain rewards points or other card perks. For reward point enthusiasts, not being able to use their card at many places is enough to deter them from getting the American Express card at all.

Especially when many of the American Express cards have hefty annual fees. Why pay a steep annual fee if you can’t use the card everywhere?

Another common merchant complaint is how generously AmEx favors its customers in terms of chargeback claims. If a customer makes a claim with American Express, the financial institution will often refund the money.

This leaves the merchant without the money and typically without the returned item or compensated service. While this is good for consumers, it does mean that even more merchants will opt out of accepting American Express cards altogether.

AmEx Cards Have High Fees

Speaking of fees, many credit cards across all banks have annual fees for consumers to offset the perks and benefits available to the cardholders. Some don’t have any fees at all, and this is also true of Amex’s lower-range card offerings. However, many of the higher-end, higher-limit cards have fees in the hundreds or even thousands of dollars per year.

American Express Gold Card, for example, costs $250 to maintain per year. The American Express Platinum Card has a whopping $550 annual fee. There are other cards that have fees ranging in the thousands per year. However, these are considered “exclusive” and not available to most consumers.

If you are a cardholder that spends enough money on their credit cards to make the high dues worthwhile, the fees likely won’t affect you. However, many people just aren’t spending enough or receiving enough back in rewards, points, and miles to justify the high cost.

The problem is compounded by the limited range of accepted merchants. For example, if someone is expecting to get a lot of reward points from Costco, which does not accept American Express. Smaller merchants as well tend not to accept AmEx due to the high merchant fees. Consumers relying on these merchants for rewards may not find AmEx cards with high fees to be a good choice.

It sounds like American Express is making efforts to solve this problem in recent years, however. In an interview with U.S. News back in 2019, a representative from American Express reported that they were working to become more widely accepted by merchants. They still have a long way to go to get on pace with Visa and MasterCard, however. Many merchants and customers remain leery of their reputation for high merchant fees, and their reputation for inconsistent merchant acceptance remains.

American Express Card Limits Can Be Excessive

High credit card limits don’t initially sound like a drawback to most people. In fact, it seems like it would be a good thing. High credit card limits can be useful for building credit due to improved credit utilization.

However, the high limits on AmEx cards (often much higher than their competitors) can be a drawback for some consumers. High spending limits won’t be an issue if the customer has a good grasp of interest rates and spends wisely.

Inversely, for somebody new to credit cards or prone to poor financial management, this could be devastating. High interest rates combined with high credit card limits mean that a month of reckless spending could keep a consumer trapped in a cycle of debt and interest rates for a very long time.

A consumer is prone to overspending on their credit cards if they are not informed about good financial practices. Some critics wonder if credit card companies (like American Express) give excessively high spending limits by design to lure consumers into more spending than they can afford. This issue compounds with higher-than-necessary credit card limits.

Consumers should take extra caution when pursuing an American Express card and be wary of accepting a card well out of their financial limits. Credit card companies gain most of their revenue through interest rates and late payment fees. The lure of rewards and cashback must be weighed against the devastating reality of high interest rates.

Strict Card Limits for AmEx Customers

This is another one of those topics that won’t affect most consumers. But, for credit card enthusiasts, the strict credit card limits imposed by American Express can be disappointing. American Express only lets its consumers have up to four of their card offerings at one time.

Why would anybody want more than four credit cards from one banking institution? Well, many consumers do something called “point churning”, which basically means getting a card for its welcome bonus. After the welcome bonus has been earned, the consumer closes the card and starts the process over again.

Again, this likely will not affect the majority of banking customers. However, the stricter limits have been disappointing to those who are trying to maximize points and rewards. Additionally, the limit extends to both personal and business cards. So, consumers who need additional American Express cards for business purposes may find themselves frustrated by the limits.

AmEx Customer Service is Disappointing Customers

American Express consumers, particularly in recent years, have been complaining more frequently of poor-quality customer service. Things like concierge services and card services are coming under scrutiny for long wait times and unaddressed service issues. Wait times have been reportedly taking sometimes up to several hours before a customer can speak to a representative.

Customer service quality isn’t always a dealbreaker. In fact, many customers have come to expect poor customer service from large corporations. But considering the high annual price point for perks like concierge services that AmEx customers have come to expect, this lowered quality feels extra disappointing.

On the flip side of this, American Express does have a long history of quality customer service. Many consumers say that the customer service, despite its problems, still vastly outperforms other banking institutions. A lot of customers really enjoy the luxury lounges and concierge services, despite long wait times for service.

Conclusion

American Express is still the chosen brand for millions of consumers. This is because of its wide range of cards, luxury offerings, and significant rewards and perks. Each bank and financial institution has its benefits and drawbacks. Despite the many reasons that people choose AmEx, there are plenty of valid reasons to bypass the brand in favor of other options. However, weighing the good—and the bad—allows consumers to make informed choices about their financial institutions.