More on Amex and Me

Corrections and suggestions are always appreciated here at Moneybox, and of course readers tend to be pretty open with their alternative points of view on pretty much any topic I address. Still I was surprised to get several e-mails from people, responding to a recent column, who suggested that I was wrong about not having paid a fee on my American Express card in the past. Yes, these people informed me, you have been paying an annual fee all along.

No, I have not. My card is part of the Optima line that Amex rolled out several years back—unlike regular Amex charge cards, Optima offerings let users carry a balance. That, in fact, was the point: These cards were an explicit bid for a piece of the revolving debt market. My card no longer carries the word “Optima” anywhere, although it does still appear on my bill. But the point is, this particular card did not carry a fee, which is why I decided to get one.

The related observation that several people offered is that American Express has been making plenty of money off me whether or not I pay a fee or carry a balance, by way of the transaction charges it collects from merchants who accept the card. It’s certainly true that card companies generate revenue through such fees, but it’s also true that they are hardly content with that lone revenue stream. Card companies are intensely focused on signing up customers who carry a balance because they end up making a lot more profits off those customers, via interest charges, than they do off merchants. If Amex is content with the transaction fees generated by the routine use of my card, the company certainly wouldn’t bother introducing an annual fee (which happens throughout the industry, all the time, and is not some crazy new maneuver Amex dreamed up) that might cost it some card users.

Anyway, that latter point is of course open to further debate, and I should have brought it up in the original column. To be clear, I am, generally speaking, a big fan of the benefits of an informed and opinionated readership; it’s rare that I’ll claim to have greater knowledge of every fact relating to a particular subject than all Moneybox readers combined. In the case of my own credit card bills, however, I think I’m pretty safe making that claim. Still, I have a certain admiration for those who would even challenge me on that—I certainly give them full credit for their confidence.