American Express Bank review: savings accounts from the card giant

By Peter Andrew

I'd better come clean. I rather like American Express. True, I don't have any of its products, but that's because the chances of the company approving me for any of its plastic are so tiny that I don't bother applying. People with my history aren't exactly core target market for AmEx. But I know it's won top spot in the J.D. Power U.S. Credit Card Satisfaction Study in every one of the seven years the survey has existed, including 2013. And a large part of that success is down to its card division's commitment to excellent customer service.

So when it comes to American Express Bank -- the company's online-based deposits division that offers savings accounts and CDs -- do the venerable company's best virtues still shine through?

American Express Bank customer service

You're probably already aware that, at least at the time of writing, American Express Bank, FSB (federal savings bank) is paying competitive yields on its online savings accounts, and that it has done so consistently for some time. But has the deposits side of the business successfully absorbed the customer-service ethos of its sister company, the card division?

That's a tough call to make. The bank doesn't have its own listing on the Better Business Bureau website, and a search for it there takes you to its parent's (American Express Company's) entry, where it gets a creditable A on a scale that runs from A+ to F.

However, trawl through online forums, and you're likely to find opinions of past and present customers of the banking division divided. This is no great surprise. Every company (including the bank's competitors) with a huge number of customers is bound to have some who are discontented. Moreover, people who have bad experiences tend to be more vocal than those who are happy, and the fact that so many in the latter group bother to speak up in support is a good sign. On balance, it looks as if American Express Bank (AEB) is looking after savers pretty well.

American Express Bank Accounts

No fees are charged to open or maintain any account, and there are no minimum balance requirements. AEB is essentially an online bank, so it's not for true technophobes. However, its systems seem easy to use, and few are likely to encounter problems. You can easily link to up to three external accounts -- including your checking one, if you choose -- to your AmEx funds, so you should normally be able to make deposits and withdrawals with the minimum of fuss. You can also send checks for deposit through the mail, and use the call center to request withdrawals by check.

Savings accounts pay competitive rates, and have done so consistently. At the time of writing, they're not quite the highest generally available, but they're only about 0.05 percent annual percentage yield (APY) short, which isn't likely to keep even the biggest depositor awake at night.

When it comes to certificates of deposit (CDs), the world has gone nuts. Right now, if you tie up your money in an AEB CD for six months, you stand to get less than half the rate available with one of the bank's online savings accounts. Even if you have a five-year CD, you can expect significantly less than a normal saver. This is presumably because the bank thinks rates could fall further (no, really!) in the future. Indeed, in Nov. 2013, The Financial Times ran a report under the headline, "US banks warn Fed interest cut could force them to charge depositors." Negative interest rates! Maybe a long-term CD isn't as terrible an idea as it first seems.

Still, interest rates are liable to change at any time, so checking AmEx's current rates in the table within this article is a good idea if you're comparing yields today.

American Express Bank history

Of course, American Express's history goes back to 1850, when Henry Wells, William G. Fargo (yes -- those two) and John Butterfield established it in New York. However, the Federal Deposit Insurance Corporation (FDIC) reckons that American Express Bank, FSB was founded as recently as 2000. Back then, it operated under a different name and from a different city. It was only in 2004 that it moved its headquarters to Salt Lake City, Utah and took on its current name.

Those thinking of entrusting their savings to AmEx may take comfort in the group's size. According to its website, it has recently had $153 billion in assets, 63,500 employees in 130 countries and an annual revenue of $31.6 billion. The amount spent on its cards last year was close to $900 billion. In case you think that's not too big to fail, deposits are insured by the FDIC in accordance with its usual terms and conditions. At the moment, that puts depositor protection at $250,000 per depositor per insured financial institution. Check the corporation's website for conditions, and the caps that are current when you read this.

Verdict

With its heritage and easy-to-use IT systems, AEB feels like a good, safe home for your money. Check the table within this article before you sign up for an account to make sure American's Express Bank's rates still stand up as well as they do at the time of writing.