Capital One vs. American Express

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Difference between Capital-One and American-Express

Capital One and American Express are two of the biggest names in credit cards, and you could hardly go wrong with either one. Nevertheless, each has its relative strengths and weaknesses of course, and it is important to know what they are before you make your choice. Here’s a rundown of their more salient aspects.

Capital-One
American-Express

Market

In terms of positioning, Capital One and American Express both have their own distinct target markets, with the latter exhibiting a tendency toward a more affluent crowd. Not that Capital One is a lesser credit card; it is just that American Express’ offers and benefits are better geared towards those who have need for more extensive services. At present, American Express customers enjoy a lower charge off rate than Capital One users. Things are also quite a bit different in terms of capitalization, as you will see in the next section.

Capitalization

In terms of capital position, Capital One is markedly different from American Express in that it has a comparatively larger leveraged position, which it offsets with a captured deposit base that can be pressed into service when there is a dearth in demand for short term financing services. American Express on the other hand typically has a lower level of internal capital, although it does have a lot of leverage that is greatly dependent on securitization, as well as commercial paper markets.

At present, Capital One has obtained no less than $3.55B from United States federal government programs, and American Express has also announced an impending handout to almost the same amount.

Relative Strengths And Weaknesses

Capital One has a number of distinct advantages when compared to other credit cards, the most significant of which is its lower average credit score compared to American Express customers. Capital One also requires a lower average income level as compared to American Express. Capital One also has a significant advantage in that it offers very attractive auto lending services and programs. Furthermore, much of Capital One’s commercial lending deposits are drawn from its own commercial bank.

American Express on the other hand has the major benefit of having higher customer balances than Capital One. American Express also offers a slew of travel services, the income of which is influenced mostly by business capital spending. On the negative side, American Express doesn't have its own commercial bank as Capital One does, which may limit its ability to provide loan packages somewhat.

Similarities and Differences

Capital One

  • Has a comparatively larger leveraged position
  • Was recently awarded a government handout of $3.55B
  • Requires a lower average income level
  • Commercial lending deposits are drawn from its own commercial bank

American Express

  • Exhibits a tendency toward a more affluent crowd
  • Has a lower level of internal capital
  • Is set to receive a similar amount as Capital One’s from government sources

Which provider is easiest to word with regarding disputes?
  • Capital-One
  • American-Express
 
 

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