Why was my debit card declined? I know that having your debit card declined can be one of those embarrassing and frustrating events that many won't want to recall. Arcadia Power: Instantly save money on your electric bill by moving to clean energy with NO startup costs.Wikibuy: Want to save money on routine purchases? Generate coupon codes on auto-pilot to save money instantly.Trim: Completely free, Trim will automatically scan your expenses to save you money by lowering your internet, cable and phone bills.
VT TRANSACTION EXPRESS CARD SWIPE FREE
It's completely free to use, it will automatically calculate your net worth if you link all your accounts. Personal Capital: My personal favorite to manage my money.For the PEG ratio, anything under 1 indicates a stock that's undervalued - and both of these stocks are under 1. As such, Discover has much more credit risk than American Express.ĭiscover stock is also undervalued at present, with a P/E ratio of about 7 and a PEG ratio of 0.39. Interest income accounts for more than 80% of total revenue, with fees income making up the rest. So Discover basically has two revenue streams - interest income from its loans, and non-interest income from transactions fees on its network, interchange fees, late payment fees, and others. However, it has lower merchant/transaction fees than American Express.īecause it relies on interest income, Discover makes money by having higher loan balances than its competitors, which it seeks to foster with its Cashback Rewards feature, incentivizing customers to use the card more for purchases.ĭiscover also offers personal and student loans, but the credit card business accounts for the vast majority of its loan business. That's because Discover offers revolving credit - there's no incentive to pay off the balance monthly - and higher interest rates than American Express. But while American Express makes most of its revenue on merchant fees, Discover makes most of its revenue on interest income. Basically, it operates a self-contained network. Like American Express, Discover is a lender, card issuer, and payment processor, which means that it lends the money for charges made on its credit cards. While the business model is similar to American Express', there is a key difference. Discover Financial: Loans drive revenueĭiscover Financial ( NYSE:DFS) is the fourth-largest credit card company, and like American Express, it differs from Visa and Mastercard. The rest primarily comes from delinquency and foreign currency conversion fees.Īmerican Express stock is a good value, too, with a price-to-earnings (P/E) ratio of 18 and a low P/E-to-growth (PEG) ratio of 0.70, which means the stock's value is low relative to the company's expected future earnings. The annual fees, called net card fees, make up about 12% of the pie. The second-largest source of revenue is interest income, which accounts for about 21% of overall revenue. The merchant fees, which American Express calls discount revenue, represent about 61% of total revenue. The annual membership fees are basically the dues cardholders pay annually in return for rewards and other perks that come with being a card-carrying member. The swipe fees come from the merchant each time the American Express card is used for a transaction. If the balance is paid off each month, there's typically no interest, but if it's paid off in installments, interest is usually charged.īeyond interest revenue, American Express also generates income in two other ways - swipe or transaction fees and annual membership fees. Like a bank, it earns interest on the loan when it is paid back. Unlike Visa and Mastercard, which both make money mostly on swipe or transaction fees and doesn't actually loan out funds to cardholders, American Express also serves as a bank that loans out the money that its credit card customers spend. That commitment speaks for itself.Īmerican Express has a simple and straightforward business model, but it's different from its two larger competitors, Visa and Mastercard. American Express has been in the holding company's portfolio since 1993, making it Berkshire's third-oldest holding and its third-largest holding. What you may not know is that it is one of Berkshire Hathaway founder and CEO Warren Buffettʻs favorite stocks. American Express: A favorite of Warren BuffettĪmerican Express ( NYSE:AXP) is one of the more iconic brands in the world, known as one of the major credit card companies in operation today. Let's take a closer look at two well-known credit card companies that fall into the latter category - good, undervalued stocks that are pretty easy to understand.
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