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Summary of Significant Accounting Policies | 12 Months Ended
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Dec. 31, 2012
Disclosure Text Block [Abstract] |
Basis of Presentation | NOTE 1 S ummary of S ignificant A ccounting P olicies T he C ompany American Express Company (the Company) is a global service s company that provides customers with access to products, insights and experiences that enrich lives and build business success. The Company's principal products and services are charge and credit payment card products and travel-related services offered to consumers and businesses around the world. The Company also focuses on generating alternative sources of revenue on a global basis in areas such as online and mobile payments and fee-based services. The Company's various products and services are sold globally to diverse customer groups, including consumers, small businesses, mid-sized companies and large corporations. These products and services are sold through various chan nels, including direct mail, on line applications, targeted direct and third-party sales forces a nd direct response advertising. P rinciples of C onsolidation The Consolidated Financial Statements of the Company are prepared in conformity with U.S. generally accepted accounting principles (GAAP). All significant intercompany transactions are eliminated. The Company consolidates all entities in which the Company holds a “controlling financial interest.” For voting interest entities, the Company is considered to hold a controlling financial interest when the Company is abl e to exercise control over the investees' operating and financial decisions. For variable interest entities (VIEs), the Company is considered to hold a controlling financial interest when it is determined to be the primary beneficiary. A primary beneficiary is a party that has both: (1) the power to direct the activities of a VIE that most significantly impact that entity's economic performance, and (2) the obligation to absorb losses, or the right to receive benefits, from the VIE that could potentially be significant to the VIE. The determination of whether an entity is a VIE is based on the amount and characteristics of the entity's equity. Entities in which the Company's voting interest in common equity does not provide the Company with control, but allows the Company to exert significant influence over their financial and operating decisions, are accounted for under the equity method. All other investments in equity securities, to the extent that they are not considered marketable securities, are accounted for under the cost method. F o reign C urrency Assets and liabilities denominated in foreign currencies are translated into U.S. dollars based upon exchange rates prevailing at the end of each year. The resulting translation adjustments, along with any related qualifying hedge and tax effects, are included in accumulated other comprehensive (loss) income (AOCI), a component of shareholders' equity. Translation adjustments, including qualifying hedge and tax effects, are reclassified to earnings upon the sale or substantial liquidation of investments in foreign operations. Revenues and expenses are tra nslated at the average month-end exchange rates during the year. Gains and losses related to transactions in a currency other than the functional currency, including operations outside the United States where the functional currency is the U.S. dollar, are reported net in the Company's Consolidated Statements of Income, in other non-interest revenue, interest income, interest expense, or other, net expense, depending on the nature of the activity. Net foreign currency transaction gains amounted to approximately $120 million, $145 million and $138 million in 2012, 2011 and 2010, respectively. Amounts Based on Estimates and A ssumptions Accounting estimates are an integral part of the Consolidated Financial Statements. These estimates are based, in part, on management's assumptions concerning future events. Among the more significant assumptions are those that relate to reserves for cardmember losses relating to loans and c harge card receivables, proprietary point liability for Membership Rewards cost s, fair value measurement, goodwill and income taxes. These accounting estimates reflect the best judgment of management, but actual results could differ. Total Revenues Net of Interest E xpense Discount Revenue Discount revenue represents fees generally charged to merchants with which the Company, or its GNS partners, has entered into card acceptance agreements for facilitating transactions between the merchants and the Company's cardmembers. The discount generally is deducted from the payment to the merchant and recorded as discount revenue at the time the charge is captured. Net Card Fees Card fees, net of direct card acquisition costs and a reserve for projected membership cancellations, are deferred and recognized on a straight-line basis over the 12-month card membership period as Net Card F ees in the Conso lidated Statements of Income. T he unamortized net card fee balance is reported net in Other L iabilities on the Consolidated Balance Sheets (refer to Note 11). Travel Commissions and Fees The Company earns travel commissions and fees by charging clients transaction or management fees for selling and arranging travel and for travel management services. Client transaction fee revenue is recognized at the time the client books the travel arrangements. Travel management services revenue is recognized over the contractual term of the agreement. The Comp any's travel suppliers (e.g., airlines, hotels and car rental companies) pay commissions and fees on tickets issued, sales and other services based on contractual agreements. Commissions and fees from travel suppliers are generally recognized at the time a ticket is purchased or over the term of the contract. Commissions and fees that are based on services rendered (e.g., hotel stays and car rentals) are recognized based on usage. Other Commissions and Fees Other commissions and fees include foreign currency conversion fees, delinquency fees, service fees and other card related assessments, which are recognized primarily in the period in which they are charged to the cardmember (refer to Note 19). Also included are fees related to the Company's Membership Rewards program, which are deferred and recognized over the period covered by the fee. The unamortized Membership Rewards fee balance is included in other liabilities on the Consolidated Bal ance Sheets (refer to Note 11). Contra-revenue The Company regularly makes payments through contractual arrangements with merchants, corporate payments c lients, car d members and certain other customers. Payments to such customers, including cash rebates paid to cardmembers, are generally classified as contra-revenue unless a specifically identifiable benefit (e.g., goods or services) is received by the Company or its cardmembers in consideration for that payment and the fair value of such benefit is determinable and measurable. If no such benefit is identified, then the entire payment is classified as contra-revenue and included in the Consolidated Statements of Income in the line item where the related transaction revenues are recorded (e.g., discount revenue, travel commissions and fees and other commissions and fees). If such a benefit is identified, then the payment is classified as expense up to the estimated fair value of the benefit. Interest Income Interest on cardmember loans i s assessed using the average daily balance method. Unless the loan is classified as non-accrual, i nterest is recognized based upon the outstanding balance, in accordance with the terms of the applicable account agreement, until the outstan ding balance is paid or written off. Interest and dividends on investment securities primarily relates to the Company's performing fixed-income securities. Interest income is accrued as earned using the effective interest method, which adjusts the yield for security premiums and discounts, fees and other payments, so that a constant rate of return is recognized on the investment security's outstanding balance. Amounts are recognized until such time as a security is in default or when it is likely that future interest payments will not be received as scheduled. Interest on deposits with banks and other is recognized as earned, and primarily relates to the placement of cash in interest-bearing time deposits, overnight sweep accounts, and other interest-bearing demand and call accounts. Interest Expense Interest expense includes interest incurred primarily to fund cardmember loans, charge card product receivables, general corporate purposes, and liquidity needs, and is recognized as incurred. Interest expense is divided principally into two categories: (i) deposits, which primarily relates to interest expense on deposits taken from customers and institutions, and (ii) long-term debt and other, which primarily relates to interest expense on the Company's long-term financing and short-term borrowings, and the realized impact of derivatives hedging interest rate risk. B alance S heet Cash and Cash Equivalents Cash and cash equivalents include cash and amounts due from banks, interest-bearing bank balances, including securities purchased under resale agreements, and other highly liquid investments with original maturities of 90 days or less. Premises and Equipment Premises and equipment, including leasehold improvements, are carried at cost less accumulated depreciation. Costs incurred during construction are capitalized and are depreciated once an asset is placed in service. Depreciation is generally computed using the straight-line method over the estimated useful lives of assets, which range from 3 to 10 years for equipment, furniture and building improvements. Premises are depreciated based upon their estimated useful life at the acquisition date, which generally ranges from 30 to 50 years. Leasehold improvements are depreciated using the straight-line method over the lesser of the remaining term of the leased facility or the economic life of the improvement, which ranges from 5 to 10 years. The Company maintains operating leases worldwide for facilities and equipment. Rent expense for facility leases is recognized ratably over the lease term, and include s adjustments for rent concessions, rent escalations and leasehold improvement allowances. The Company recognizes lease restoration obligations at the fair value of the restoration liabilities when incurred, and amortiz es the restor ation asse ts over the lease term. The Company capitalizes certain costs associated with the acquisition or development of internal-use software. Once the software is ready for its intended use, these costs are amortized on a straight-line basis over the software's es timated useful life, generally 5 years. O ther Significant Accounting P olicies The following table identifies the Company's other significant accounting policies, the Note and page where the N ote can be found.
|  | Note |  |  |  |
Significant Accounting Policy | Number | Note Title | Page
Fair Value Measurements |  | Note 3 |  | Fair Values |  | Page 68
Accounts Receivable |  | Note 4 |  | Accounts Receivable and Loans |  | Page 72
Loans |  | Note 4 |  | Accounts Receivable and Loans |  | Page 72
Reserves for Losses |  | Note 5 |  | Reserves for Losses |  | Page 77
Investment Securities |  | Note 6 |  | Investment Securities |  | Page 79
Asset Securitizations |  | Note 7 |  | Asset Securitizations |  | Page 80
Goodwill and Other Intangible Assets |  | Note 8 |  | Other Assets |  | Page 81
Membership Rewards |  | Note 11 |  | Other Liabilities |  | Page 87
Derivative Financial Instruments and Hedging Activities |  | Note 12 |  | Derivatives and Hedging Activities |  | Page 87
Income Taxes |  | Note 17 |  | Income Taxes |  | Page 95
Stock-based Compensation |  | Note 20 |  | Stock Plans |  | Page 98
Retirement Plans |  | Note 21 |  | Retirement Plans |  | Page 100
Regulatory Matters and Capital Adequacy |  | Note 23 |  | Regulatory Matters and Capital Adequacy |  | Page 106
Legal Contingencies |  | Note 24 |  | Commitments and Contingencies |  | Page 107
Reportable Operating Segments |  | Note 25 |  | Reportable Operating Segments and Geographic Operations |  | Page 108
Cl assification of Various I tems Beginning the first quarter of 201 2, the Company revised the income statement reporting of annual membership card fees on lending products, increasing net card fees and reducing interest on loans. Corresponding amounts presented in prior periods have been reclassified to conform to the current period presentation. Certain other reclassifications of prior period amounts have been made to conform to the current period presentation. The card fees revision previously discussed and these other reclassifications did not have a material impact on the Company's financial position, results of operations or cash flows.

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