You’ll Never Know the Exact Limit of Your Credit Card With No Preset Spending Limit

Some credit cards come with firm limits tied to factors such as your income and credit history. Other credit cards have “no preset spending limit.” But this does not mean that they have no spending limit.

Your credit ceiling on cards with no preset spending limit changes as spending or payment habits, for instance, change.

Here’s more on how cards with no preset spending limit work.

A no preset spending limit, or NPSL, credit card has no stated credit limit. You won’t get an actual number that tells you how much you can spend, but there is still a limit.

“A credit card with no preset limit is really a bit of a misnomer,” says Mike Sullivan, personal financial consultant at Take Charge America, a Phoenix-based nonprofit credit counseling and debt management agency. “Every card has some limit, and consumers can be notified that their no preset limit card will be declined if that unknown limit is reached.”

The limit can change monthly based on your:

Assuming that your financial situation remains more or less the same, you may be able to charge up to the same amount on your card each month. An increase or a decrease in income or a change to your credit score, on the other hand, could influence how much your card issuer allows you to spend.

Cards with no preset spending limit are less common than those with a fixed credit limit. In fact, American Express is the only major issuer of no preset spending limit cards. You can choose from personal or business cards.

A credit card with no preset limit may appeal to someone who often charges a sizable amount.

“Someone who travels frequently, for example, and has to charge $10,000 worth of airline tickets, in addition to hotels and meals, might be challenged by even a card with a $20,000 limit and need more flexibility,” Sullivan says.

You may choose a card with no preset limit if you run a small business and routinely need to buy costly equipment or supplies. Using an NPSL card wisely could also pay off if you expect to make large purchases.

Monica Eaton, chief executive officer of Fi911 and Chargebacks911, risk mitigation and chargeback management firms, says, “Essentially, the more you spend and pay off, the more the issuer may allow you to spend in the future.”

A card with no preset spending limit could be especially valuable when purchases earn rewards. The Platinum Card from American Express, for instance, offers five Membership Rewards points per dollar on flights and prepaid hotels booked through the American Express travel portal and on flights books directly with the airlines. All other eligible purchases earn one point per dollar. Membership Rewards points can be redeemed for travel, merchandise, statement credits and gift cards.

Clearly, these cards can provide flexibility and convenience if you need to make a large purchase, but they have some downsides. For one, you don’t know your exact credit limit. Some purchases may be declined, and that can be embarrassing.

If you have to pay your balance in full each month and you do not, you could risk racking up late fees. A revolving NPSL card lets you carry a balance, but a high annual percentage rate could make paying off a big purchase even more costly because of interest charges.

Your credit score is composed of several different factors, but one of the most important is how much you owe on credit accounts. This takes into account your credit utilization ratio, or the percentage of available credit you’re using. A credit utilization ratio of 30% or less is best.

With a traditional credit card that has a firm limit, you can easily track your utilization ratio. Divide your total credit card balance by your total credit card limit, and then multiply the result by 100 to get your credit utilization ratio as a percentage.

Because an NPSL card lacks a stated limit, it is noted on your credit report as a flexible spending credit card. The latter is not part of the credit utilization ratio.

Some cards offer flexible spending limits, meaning that they have limits you may extend from time to time. You may be more likely to get this benefit with a business card than a personal one, depending on the card issuer.

American Express offers two business cards that allow you to spend more than your limit:

You don’t need to call and ask permission to exceed your limit, and no over-limit fees apply with either card. For peace of mind, you can log into your account or call beforehand to check your purchasing power.

Other card issuers, including Chase, Citibank, Wells Fargo and U.S. Bank, may authorize over-limit transactions on a case-by-case basis. You don’t have to call for authorization, but it may be a good idea. Your card issuer could raise your credit limit for the purchase.

Discover has a different policy on transactions that would put you over the limit on personal and business credit cards. After you make one transaction that puts you past your limit, any other card purchases are blocked. Bank of America also blocks transactions that push you beyond your credit limit.

A personal or business credit card with no preset spending limit or flexible spending limits may sound promising. But knowing whether it fits your needs compared with a card that has a fixed limit is important. As you evaluate card options, here are the most important factors to keep in mind:

Lastly, review your credit report and check your credit score to gauge how likely you are to qualify for a card with no preset spending limit. These cards are generally for people with excellent credit.

Reviewed on May 17, 2023: This story was previously published at an earlier date and has been updated with new information.