Credit cards with no preset spending limit -- or NPSL cards -- may sound ideal, but not having a set spending limit doesn’t mean they offer unlimited spending potential.
Cards in this niche typically set spending caps based on a consumer’s regular spending habits and repayment trends. Many cards with no preset spending limits are also charge cards that require full payment each month and don’t let you carry a balance from one month to the next (not that you should).
Here’s everything you need to know about this type of flexible spending credit card.
What is a ‘no limit’ card?
It’s true that an NPSL card doesn’t have a fixed limit like a traditional credit card, but these cards do have monthly limits.
“No preset spending limit” really means that your spending limit is flexible. Unlike a traditional card with a set limit, the amount you can spend adapts based on factors such as your credit score, payment history and the types of purchases you make.
There’s a good reason American Express gives its NPSL cardholders so much room to run: Qualifying for an account typically requires good to excellent credit and an above-average income.
According to Tommy Lee, a FICO principal scientist, there are two types of NPSL accounts: open and revolving.
An open card, sometimes referred to by the credit bureaus as a charge card, “typically has no preset spending limit and requires you to pay the balance in full each month,” Lee said. A revolving account acts more like a traditional card, allowing you to carry a balance from month to month and pay over time.
So there’s actually a limit?
Officially, yes, NPSL cards have limits. But they aren’t typically disclosed. In theory, your card may get declined if you spend thousands on a single purchase -- but maybe not. While a typical credit card limit maxes out around $25,000, NPSL card limits are much higher. But there are no fees for exceeding a credit limit, since you likely won’t even know what it is.
Who is a no preset limit card good for?
Anyone who has regular high expenses, like from traveling frequently or business, may benefit from a no preset spending limit card. Typically, the more you spend with an NPSL card and regularly pay off, the more the card issuer will let you charge. Depending on which card you have, it could offer rewards for pricey purchases you’re frequently making, which could help lower your monthly expenses.
Who should avoid cards with no preset limits?
If you don’t have to make large purchases regularly, you probably don’t need an NPSL card. And if you can’t pay your balance in full each month, you should steer away from these cards. Since the card limit is often much higher than traditional cards, that could mean hundreds to thousands in interest for carrying a balance -- not to mention late fees and penalty APRs. Missing a payment could also affect your credit report and affect how much you’re able to spend with the card.
If you’re easily enticed into spending on purchases you might not need, a card with no preset spending limit could be a risky move.
NPSL cards and credit scoring
Your NPSL card may or may not contribute to your credit score the exact same way a standard credit card will. One of the many factors that make up your credit score is credit utilization, or how much of your total available credit you’re using. Since an NPSL card doesn’t have a set credit limit, it typically won’t be included in your total available credit.
What will affect your credit score, however, is your payment history and the amount of debt you carry on the card. Since your payment history is the most important factor that makes up FICO score, always paying your bill on time can help boost your credit history the most.
How to protect your credit score when using an NPSL card
Even though the balance on your NPSL card isn’t included in your credit score’s utilization ratio, it can still make an impact. “The amount of debt owed is considered by the FICO Score and charge card balances can factor into these calculations,” Lee said. “Furthermore, the payment history and length of time you’ve had the account are also considered, so paying your charge card balances as agreed is extremely important.”
Although your balance isn’t technically factored into the math of utilization, FICO could lower your score if you make an expensive purchase.
How to use an NPSL card
If you’re making large purchases because you own a business or travel frequently, having an NPSL card could be useful. However, it’s still important to use it responsibly and to not get enticed into spending outside of your budget.
Pay off your balance each month
Although there are general guidelines, the specific details about how each credit bureau calculates our scores aren’t disclosed. That noted, an NPSL card should not be used as a bottomless bank account. Spend only what you can afford and pay off the balance at the end of every month. This will help you stay within your budget and avoid racking up debt with accruing interest.
Check your spending power
Before making a large purchase, check to see if your card issuer offers an online tool to check your spending limit, or call customer service and ask them to approve a large purchase verbally. Reaching out ahead of time could safeguard your score from an unnecessary ding.
NPSL cards to consider
Currently, American Express is the primary issuer for cards with no set spending limit. If you’re eligible, consider choosing one of the cards listed below:
- The Platinum Card® from American Express*: A high-end travel card with plenty of card perks.
- The Business Platinum Card® from American Express: For business owners who travel all the time.
- American Express® Gold Card*: Great for travelers who love to eat out or cook while on the road.
- American Express® Business Gold Card: For business owners who travel and cook or eat out.
- American Express® Green Card*: For travelers looking for a few extra traveling perks.
- Business Green Rewards Card from American Express*: For the traveling business owner who doesn’t want to spend too much on an annual fee.
- The Plum Card® from American Express: An interesting -- yet not overly valuable -- option for business owners.
- Centurion® Card from American Express*: Also known as the Black Card, you generally need to be invited to apply for this high-end card, which offers concierge service and other perks, though existing Amex members may be able to request to apply.
*All information about The Platinum Card from American Express, American Express Gold Card, American Express Green Card, Business Green Rewards Card from American Express and the Centurion Card from American Express has been collected independently by CNET and has not been reviewed by the issuer.
Potential disadvantages of no preset spending limit cards
Credit cards and charge cards with no preset spending limit have many of the same pros and cons as other credit cards, yet there are a few additional upsides and downsides to keep in mind:
- Potential to overspend: Not having a spending limit can make it easier to spend more than you planned without worrying about the consequences. This can lead to credit card debt and high interest charges.
- Unclear impact on credit utilization: Because cards with no preset limit can be reported differently on your credit reports, you may not get the full benefit of low credit utilization if you always pay your balance in full.
- High qualification requirements: Cards with no preset limit are more difficult to qualify for since they’re geared toward big spenders.
- Payment inflexibility: Some NPSL cards are charge cards that don’t let you carry a balance from one month to the next. This gives you a lot less flexibility to use your card over time, particularly if you need to make large purchases and spread the payments out over several months or years. However, we recommend always paying off your balance in full, regardless of what type of card you have.
The bottom line
NPSL cards can be great for people who regularly have high expenses, as long as you can pay the balance off in full each month. No preset spending limit cards also have higher qualification requirements, which typically means unless you have good to excellent credit with an above-average income, you may not qualify.
But if you can, they could be a good way to earn rewards for high expenses. Use the card responsibly -- meaning don’t overspend and pay off your balance in full -- and you shouldn’t have any issues.
More credit card advice
- Best Cash-Back Credit Cards
- Best Business Credit Cards
- Best Student Credit Cards
- Best No-Balance-Transfer-Fee Credit Card
- Best Airline Credit Cards
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