Shares of American Express (AXP) jumped 11% in August, which is the kind of move that makes you question every financial decision you’ve ever made. S&P Global Market Intelligence says it’s because the Fed’s about to lower rates, but let’s be honest-this is the same company that charges you for using your own money. Still, here we are, watching their stock do the cha-cha while we’re stuck in a tango of regret.
The credit card for the affluent customer
American Express has always been the guy who shows up to the party with a bottle of wine and a side of entitlement. They cater to the elite, offering rewards that feel less like perks and more like a tax on your wallet. It’s like they’re saying, “We’ll take your money, and then we’ll pretend we’re doing you a favor.” Despite having fewer users than Visa, they somehow make twice the cash. Because of course they do. The rich are just better at spending, apparently.
In Q2, revenue jumped 9%, and earnings per share? Up 17%. That’s the kind of number that makes you think, “Why am I not investing in this?” But then you remember they charge $500 for a membership fee. It’s like they’re not just selling credit-they’re selling a lifestyle. And you’re not invited.
American Express operates like a closed-loop universe. They’re not just a card; they’re the entire galaxy. While other companies partner with banks, Amex plays the role of both the conductor and the orchestra. This gives them control, but also the audacity to charge you for everything. It’s a model that works, but only if you’re okay with being a pawn in their game of financial chess.
They also make money off your deposits, which is like lending your neighbor your lawn mower and then charging them for the privilege. It’s genius, but also a bit of a slap in the face. You’re not just paying for credit-you’re paying for the luxury of being ripped off.
Their rewards program is the cherry on top of this sugary cake. Annual fees are up 20%, and they’re eating into more than 13% of revenue. It’s like they’re not just selling you a card; they’re selling you a subscription to their sense of superiority.
Low interest rates should boost business
Lower rates are supposed to be a gift, but Amex is already ahead of the curve. They’re the guy who shows up to the barbecue with a cooler full of beer and a smirk. When money’s cheaper, people spend more, which is great news for Amex. Because they’re not just charging you for purchases-they’re charging you for the audacity to exist in a world where money is abundant.
Default rates are already improving, which is a relief. But let’s not get too excited. Amex’s default rates are like a broken toaster-still functional, but only if you’re okay with the risk of getting electrocuted. They’re the best in the business, but that’s not exactly a high bar.
American Express has been a steady performer for decades, which is impressive until you realize they’ve been charging you for it. Warren Buffett’s a fan, which is like saying, “This guy’s good at what he does.” But if you’re looking for dividends, Amex is the guy who pays you in change and expects a tip.
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2025-09-05 16:55