5 Things You Need to Know if You Buy American Express Today
American Express (NYSE: AXP) has a long-standing reputation associated with luxury and a high-quality customer base. The company has proven itself an excellent long-term performer but has faced some challenges this year, as economic headwinds weigh on the consumer finance industry. If you're buying American Express today, here are five things you need to know first.
American Express operates the third-largest payment network, trailing only and Mastercard. The company earns fees when it processes payments through its network. However, unlike its larger peers, American Express also holds credit card loans on its balance sheet, providing it with interest income.
Holding loans on its books exposes American Express to credit risk. To mitigate some of this risk, the company targets premium customers with its high-end credit card products, which is why consumers will pay $695 annually for the American Express Platinum card. The brand, often associated with exclusivity and luxury, is a considerable advantage that adds a ton of value to the company.
Source Fool.com
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