Thread: American Express Bank - WTF?

AMEX decided to become a bank last fall to get TARP money.

I'm not sure if I would worry about this. There are technical advantages to being a bank including being able to borrow from the federal reserve cheaper than from other sources. But you can't just declare yourself a bank and reap all the benefits. You have to have certain deposit threshholds. I think that is all they are trying to do. It could end up being a very good thing for customers but we will have to wait and see.

Walmart was also thinking of becoming its own bank a while back just to save on the fees it pays to banks from credit card processing. You can bet a lot of banks were worried about Walmar competing with them at very low prices.

I would not worry about AMEX or Walmart becoming another Citi. If anything it is going to be extremely difficult for any bank to get that large in the future. I doubt BofA or Citi will be broken up, though it has been talked about, but I also doubt any bank will be allowed to get so big again without severe restrictions that they will not want to deal with including consumer protections.

Yep, I read the article after my first posting. That's all they are doing - looking for a cheap and reliable source of funding to back charges people make. I bet they will get most of their deposits throuh CDs they get through Ameriprise or CDs they sell directly. That could actually be a very good thing for card holders.

I just stumbled upon this the other day:

"American Express Bank, FSB" is currently offering higher yield APY's for savings accounts(1.30%) and CD's(2.0%)

Everything is done online (or through mail) as they don't have brick and morter outlets, though.

If their rates stay like this for a while I just might open an account.