Published in: Credit Cards | Dec. 11, 2018

American Express vs. Visa: How Do I Choose?

There are several major differences between the two credit card brands. Here’s a guide on how to decide.man deciding between 2 credit cards

Image source: Getty Images.

American Express and Visa are two of the world’s three major payment credit card brands. Their signs -- Visa accepted here! -- are common sights in store windows across the planet, to the point where it’s rare that you can’t use at least one of them for a purchase no matter where you choose to shop.

Although the plastic bearing the American Express and Visa logos basically confer the same power, i.e. the ability to buy something, there are numerous differences between the two. As such, one issuer’s card might be more suited for a particular type of consumer than the other.

We’ll explore that, but first let’s dive into the basics of these two famous card brands.

How American Express and Visa differ

The major difference between American Express and Visa is the issuer or issuers behind the brand. When you own a Visa card, your issuer -- i.e., the entity extending the credit to you -- is a third party, typically a bank. Visa the company simply acts as the processor of the payment.

That’s why Visa cards often bear the name of the issuer too; that company wants you to know who you’re borrowing from. In fact, sometimes the Visa name doesn’t even appear in the card’s title (although you’ll almost always see the Visa logo on the card).

Examples of issuer lead-branding are plentiful in the Visa universe:

Visa might not be prominent in the card’s title, but the company does provide certain benefits for those holding its branded plastic. Services such as travel insurance and extended warranty protection are offered through companies affiliated with the big payment processor.

By contrast, American Express acts as both the issuer and the payment processor for the vast majority of its cards (it does a limited amount of co-branding with outside issuers).

So when you swipe the typical American Express card, you’re borrowing money from American Express the company and not a third party. That’s not the only proprietary operation the company runs -- it created and still manages the well-known and frequently imitated Membership Rewards® program.

Advantages of American Express

As a brand, American Express is identified with luxury. Its classic lineup of cards serves the higher end of the market, and the offers and features baked into some of the cards are various and very useful. These include:

  • No pre-determined credit limit
  • Generous points/miles awards for qualifying purchases
  • Airline ticket credits
  • Reimbursement for safe traveler program (Global Entry, TSA PRE) enrollment fees
  • Uber credits
  • High-end airport lounge access

American Express cardholders -- or “members” as the issuer calls them -- are also looped into Membership Rewards®, which these days is a sprawling program full of all manner of goods and services. Over the years, the company has developed partnerships with numerous hotel chains and airlines, widening the scope of the program ever more.

American Express has also won good reviews for the quality of customer service, which is said to be responsive, helpful, and effective. Since many American Express members are habitual travelers, this can really come in handy when card-related difficulties arise in a foreign land.

Disadvantages of American Express

There is no such thing as a perfect credit card (shocking, we know). American Express cards have a lot to offer, but there are some drawbacks too. To wit:

Slant towards the elite -- Although the company has improved its card selection for not-high-worth individuals and businesses, its selection of such products remains limited.

High annual fees -- Several of the issuer’s cards for people of modest means carry no annual fee, but the company’s more established products will cost you. The standard annual fee for the Premier Rewards Gold Card, for example, is a cool $195 (although this is waived in the first year of ownership). Meanwhile, holding a Platinum Card will set you back $550 every year.

More limited acceptance -- American Express has a relatively well-heeled clientele, and this consumer base is very attractive to merchants. This is a key reason why the issuer charges slightly higher fees to businesses to process its payments. Consequently, it’s also why some merchants don’t want to bear the additional cost of accepting the card.

Charge cards -- The core American Express lineup consists of charge cards, which are credit cards that require the owner to pay the balance in full every month. That’s a particularly demanding requirement for those who like to, or must, roll over at least part of their monthly balance on a regular basis.

Advantages of Visa

Visa is, far and away, the No. 1 payment card brand on planet Earth. As of the end of 2017, there were an estimated 3.3 billion Visa-branded cards in circulation, according to the company. This number is well above those of both arch-rival Mastercard, and American Express.

That presence alone is a major reason to own a Visa-branded product. Merchants ignore this power at their peril -- it’s extremely rare to encounter a card-accepting store that won’t swipe your Visa. With that name on your plastic, it’s almost guaranteed throughout the world that you’ll be able to use it nearly anywhere cards are taken as payment.

Of course, there are other reasons to go the Visa route. Let’s hit a few of them:

Choice -- The number of issuers offering Visa-branded products is almost mind-boggling. With the great many Visa cards on the market, you can potentially find the one that best suits your circumstances.

Feature sets -- In spite of its size, Visa is fighting a constant battle against its well-heeled peers Mastercard and American Express (to say nothing of upstart digital payment solutions providers). So the company packs features onto each of its branded cards separate from the issuer; these rise in number and value as you move upwards through the following tiers:

  • Standard
  • Signature
  • Infinite

Frequent bonuses -- What makes one issuer’s Visa card more attractive than another’s? Often, this comes down to intro bonuses. It’s easy to find a card that offers bonus rewards for relatively low levels of initial spending, 0% intro APR on purchases and/or balance transfers for a certain period of time… or even both.

Disadvantages of Visa

Visa may be near-monolithic as a credit card brand, but that doesn’t mean everything connected with it is solidly beneficial. Yes, Virginia, there are drawbacks to holding this plastic too. To name a few:

Choice -- The dark side of having so much choice is that it can be time-consuming and difficult for you to find the card that comes closest to meeting your needs. Are you better off with travel rewards or cash back? If the latter, flat-rate or rotating bonus categories? Is a 0% intro APR for 18 months worth paying an annual fee on the card? Figuring this out can be quite a challenge.

Feature sets and rewards -- Yes, there are high-end Visa cards stuffed with perks and features. For the most part, though, the average Visa card can’t compete with comparable American Express products for the number and utility of perks. Ditto for most issuer rewards programs vs. Membership Rewards® offered by American Express.

So which is better for you?

To boil it down to the essence, American Express cards are a more comfortable fit for high earners who like to spend money. They are not cheap to own, and the charge cards at the heart of the company’s selection require more attention to maintain.

But you get something for this additional resource drain. You own a card with many extras, better-than-average rewards earning rates, and an awards catalog rich with choice.

So if you’ve got the budget and a high enough credit score, and plan on spending enough to generate those rewards and cash in those awards, one of the traditional American Express cards might be card No. 1 for you.

As mentioned, there are high-end Visa products, but for the most part American Express is the go-to issuer for the wealthy and free-spending. Instead, Visa is as huge as it is because its branded cards play well to the mass of consumers that sit below the elite.

So I’d say Visa-branded plastic is more suitable to those of us who might not be in the top economic tier, but need a debt instrument or several to help with our spending.

The great advantage of entering the Visa ecosystem is the possibility to get the right card(s) you want for the spending need(s) you want to address (assuming you’ve got the time and inclination to do what can amount to a lot of research).

Love to travel? Perhaps a product like the United Explorer Card will help earn a bonus ticket quickly. Like getting paid back by your issuer? Consider a well-earning cash-back card such as Chase Freedom®. Under the Visa umbrella, the possibilities are nearly endless.

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