Visa vs MasterCard vs American Express

Amex Visa MasterCard

When shopping for a new credit card, it is important to know the difference between Visa, MasterCard and American Express. There are huge differences.

A nationwide survey from the non-profit Financial Industry Regulatory Authority finds 61% didn’t comparison shop for credit cards in 2012. It’s as if millions of people simply flushed money down the drain. Just think about all those wasted perks and points.

Before you start comparing card offers, consider the institution behind the card. Is it a Visa, MasterCard, American Express? You need to know because there are big differences.

The Networks

You can choose between hundreds of bank issued credit cards with ties to airlines and hotels, universities and theme parks. There are also some smaller players, but most are backed by Visa, MasterCard or American Express.

Here’s the basic difference. Visa and MasterCard don’t issue the cards. When you buy something they simply process the transaction between the bank and store owner. They make money off each transaction.

American Express issues its own cards, finances payments and processes the transfers. Since they lend money to customers while the transfer is going through, they make most of their money from interest and fees.

Why it Matters

American Express determines its own interest rates, fees and payment schedules. However, your choices for an AmEx card are limited to the ones they offer. Since MasterCard and Visa work with banks which issue the cards, you have hundreds of options with all kinds of rates and fees. That’s why you also have to compare services.

I doubt you’ll ever hear Alec Baldwin explain the difference between a Capital One Visa and Capital One MasterCard. Knowing the difference, could save you money and headaches. Each network has different rules when it comes to acceptance overseas, fraud protection, car rental collision coverage and exclusive perks. Here are the highlights for standard cards unless noted:

Visa

Visa remains guarded about exact figures, but it claims to be accepted at tens of millions of businesses and two million ATM’s in more than 200 countries and territories. While it doesn’t win awards for customer service, Visa’s website contains more consumer information than any other network. It also has a strong brand that supports the Olympics, FIFA and the NFL.

Travel

Security

Customer Services

  • Launched V.me digital wallet service in U.S. and Europe
  • Purchases damaged/stolen within 90 days are covered by Visa
  • Extended warranty for one year, if manufacturer’s warranty is less than 3 years

High Tier - Visa Signature Cards

  • No pre-set spending limit
  • Concierge services are well known for exclusive discounts, freebies, pre-event ticket purchases and upgrades
  • Reimbursement for lost luggage, travel and emergency assistance

MasterCard

MasterCard’s 2012 annual report shows M/C was accepted at 35.9 million locations, including 2.1 million ATM’s. They have dozens of mobile payment systems worldwide and work in 150 currencies, but their best perks may be aimed at shoppers.

Returns/Exchanges

  • Price protection reimburses costs if you find a lower price in 60 days
  • Purchases are covered for 90 days from theft / damage with several restrictions
  • Return Protection reimburses you up to $250 if you change your mind within 60 days and a merchant refuses to take the item back.
  • Extended Warranties are only for manufacturer warranties 1 year or less

Travel

Security

  • Monitoring services to detect and prevent fraudulent charges
  • Zero liability protection applies once you report a lost or stolen card
  • ID Theft victims receive assistance contacting credit agencies

Extra Perks

American Express

AmEx was ranked highest in customer satisfaction six years in a row by J.D. Power and Associates Survey for interaction and rewards. While it is accepted in fewer establishments, AmEx gets high marks for communicating with customers about services and changes. However, their 2012 annual report reveals a $28 million fine for failing to follow U.S. consumer disclosure laws.

Travel

Customer Service

  • Account alerts through e-mail and texts remind you about payments
  • Mobile app lets you check balances, pay bills and review benefits
  • Purchase Protection is good for 90 days against theft or damage
  • Extended Warranties for one year on merchant warranties up to five years
  • Return Protection reimburses up to $300 if a merchant refuses to take back an unused item within 90 days, but only in U.S., Puerto Rico and Virgin Islands

Security

  • Monitoring systems catch unusual activity and alert customer
  • Fraud protection covers you without deductibles
  • Communication to consumers include account code so you know if its legit

Premium Memberships

  • Platinum members get complimentary airport clubs, $200 airline credit, discounts for companions and priority boarding
  • Concierge services for exclusive discounts, deals and pre-sale tickets
  • By Invitation Only offers for exclusive trips, events and experiences

Discover

Another rising player in the American credit market is Discover. Launched in 1986 by Sears, the nation’s first cash rewards card is expanding its global reach. Discover is accepted anywhere merchants take Pulse, JCB and Union Pay.

Discover ranked second in 2012 J.D. Power and Associates Satisfaction Survey for problem resolution, benefits and services. However, there are fewer perks than the other networks. One point worth noting for outdoor enthusiasts; Discover’s Car Rental Insurance does not specifically exclude off-road driving, which could be extremely valuable for adventure travelers.

Which One?

  • Want exclusive perks? American Express continually gets high marks
  • Travel frequently? Visa’s emergency services won’t leave you stranded
  • Like purchase protections? Take MasterCard shopping

The best way to find the right network is to determine what is most important for your goals. Many of the networks offer similar security features and all have operators 24/7, but there are big difference in customer service, travel and premium options.

Once you know which network you want, compare their offers - but don’t sign up. Check out a few credit card comparison sites and see what they have to offer. Remember, they are often affiliate sites that get paid for recommending cards, so view several to make sure you are getting the very best deal. You might wind up with better perks and lower interest rates than you could ever imagine.

  Visa MasterCard American Express
Travel
  • Accepted in over 200 countries
  • Emergency card replacement in one business day
  • Auto Rental Collision Damage Waiver covers the cost of the vehicle for up to 15 days in your home country or 31 days when traveling abroad. Unlike other networks, Visa covers theft, accidents, “loss of use” and towing charges.
  • Emergency services available worldwide through toll-free numbers with 24/7 access
  • Accepted in more than 210 countries and territories
  • Locate merchants and ATMs worldwide with the PayPass app
  • Rental car collision coverage may not be offered with all cards. Restrictions apply based on the type of vehicle and country where it is rented.
  • 24/7 Toll-free emergency services operators worldwide
  • Accepted in 140 countries
  • Luggage insurance with some no-fee cards
  • High-tier card members receive free tow truck service with Roadside Assistance 
  • Car rental protection covers theft or damage up to $50,000 with additional coverage available for a flat $25 fee
  • Reward points can be used on the American Express travel site and with 1,300 reward partners worldwide
  • Card members have the option to purchase additional travel insurance, medical insurance and baggage protection
Security
  • Verified by Visa uses additional password for secure online purchases
  • Fraud monitoring alerts customers to unusual charges
  • Zero liability for fraudulent charges, but does not include ATM transactions
  • Monitoring services to detect and prevent fraudulent charges
  • Zero liability protection applies once you report a lost or stolen card
  • ID Theft victims receive assistance contacting credit agencies
  • Monitoring systems catch unusual activity and alert customer
  • Fraud protection covers you without deductibles
  • Communication to consumers include account code so you know if its legit
Customer Service
  • Launched V.me digital wallet service in U.S. and Europe
  • Account alerts through e-mail and texts remind you about payments
  • Mobile app lets you check balances, pay bills and review benefits
Returns & Exchanges
  • Purchases damaged/stolen within 90 days are covered by Visa
  • Extended warranty for one year, if manufacturer’s warranty is less than 3 years
  • Price protection reimburses costs if you find a lower price in 60 days
  • Purchases are covered for 90 days from theft / damage with several restrictions
  • Return Protection reimburses you up to $250 if you change your mind within 60 days and a merchant refuses to take the item back.
  • Extended Warranties are only for manufacturer warranties 1 year or less
  • Purchase Protection is good for 90 days against theft or damage
  • Extended Warranties for one year on merchant warranties up to five years
  • Return Protection reimburses up to $300 if a merchant refuses to take back an unused item within 90 days, but only in U.S., Puerto Rico and Virgin Islands
Premium Perks

Visa Signature:

  • No pre-set spending limit
  • Concierge services offer exclusive discounts,complimentary items, pre-event ticket purchases and upgrades
  • Reimbursement for lost luggage, travel and emergency assistance
  • Online Marketplace provides discounts and deals on merchandise
  • Buy groceries and earn $.0.03/gallon discount on gas with the Fuel Rewards program
  • Dine out at select restaurants and earn $0.01/gallon discount for every $50 spent with the Fuel Rewards dining program
  • Concierge services, insurance and additional services are available only on premium cards
  • Platinum members get complimentary airport clubs, $200 airline credit, discounts for companions and priority boarding
  • Concierge services for exclusive discounts, deals and pre-sale tickets
  • By Invitation Only offers for exclusive trips, events and experiences