Is American Express a Bank?

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Q:

Is American Express a bank?

A:

Most of us recognize American Express (AMEX) as one of the major credit cards. The company is associated with over 22 percent of the credit card transaction in dollar volume throughout the United States. While the credit card business is  a major component of American Express, the company also contains two banking subsidiaries.

The two banking subsidiaries of American Express are American Express Centurion Bank and American Express Bank. Both banks offer deposits and the accounts are FDIC insured up to $250,000 per depositor. The banks are located in Salt Lake City, Utah.

You can open an online savings or CD account through American Express Bank by visiting the American Express Personal Savings webpage. You will not be issued an ATM/debit card or checks with your account. However, you can link up an existing bank account to your American Express bank account for easy transfers between accounts. If you want to make a check deposit into your AMEX savings account, you need to mail a check to American Express Bank. There are no monthly fees or account minimums. Click the website link above for additional details.

Interestingly, American Express as a whole converted into a bank holding company during the credit crisis of 2008. This allowed the company to qualify for assistance through the Troubled Asset Relief Program (TARP).  The Federal Reserve gave approval for this conversion on November 10,  2008. The 2008 American Express annual report explains the decision of the company to become a bank holding company:

The primary reason for the Company converting to a bank holding company was to become a Federal Reserve member and thus have the same status and regulator as a majority of the Company’s peers. Taking this action allows the Company to participate more fully in some government programs, providing greater flexibility during uncertain economic times. The Company converting to a bank holding company will change neither its payments focused model nor its core businesses.