Charge of The Plastic Brigade

The credit-card business used to be a nice, easy way for lenders to earn profits. No longer. The industry has become fiercely competitive and increasingly controversial. More and more players are trying to steal customers from their rivals by offering everything from memberships in private clubs and sweepstakes prizes to cut-rate interest rates. At the same time, the public is complaining about the high interest rates that come with their cards, and politicians are threatening banks and credit-card companies with restrictive legislation.

A new tempest arose in the industry last week when American Express, which already has 17 million U.S. cardholders,...