 Show I thought I’d take a minute to clear up a bit of credit card terminology that trips a lot of people up and that’s the concept of “No Preset Spending Limit.” This feature only applies to charge cards and cards that act as charge cards (also see:” Charge Card vs Credit Card: What’s the Difference?“)
No Preset Spending LimitIn addition to having to be paid off in full each month, a charge card is missing a number that all credit cards have: a preset spending limit! When you receive a new credit card, you know what you can spend each month. If your credit limit is set at $20,000, you know that’s what you can spend in a month (although, really, you ideally want to spend less than 30% of your credit line to preserve your credit score). Charge cards have no preset spending limit. But even more confusing is that this doesn’t mean you can spend an unlimited amount. It means you can spend up to what a computer algorithm says you can. It’s determined by many of the same factors as your credit limit would be with a credit card, however, your behavior over time impacts your spending limit. Let’s say you have an Amex Gold card with no preset spending limit. You charge $10,000 your first month, $15,000 your second month, and $13,000 your third month. The computer gets that you are spending in the $10,000 – $15,000 range each month. If you suddenly slam a Ferrari on that card, it’s likely going to get rejected, although it may not be necessarily. You really don’t know. But that said, it’s a nice feature for business cards. If you had, for example, the American Express Business Gold card (which has a nice 70,000 point welcome bonus now, by the way), or an Amex Business Platinum card, you could ramp your monthly limit up to almost anything. I know people that spend six figures every month on these charge products. They pay each month on time and over time, the system knows they are good for it. They can basically spend whatever they want, as long as it fits their spend pattern over time. What Cards Have No Preset Spending Limit?Fewer than you think! Currently in the US market, only American Express markets cards with No Preset Spending Limit. They are:
Chase did have a charge product called the Ink Bold, but that hasn’t been available for many years now. Questions?Let me know below in the comments, on Twitter, or in the private MilesTalk Facebook group. And if this post helped you, please consider sharing it! You can find credit cards that best match your spending habits and bonus categories at Your Best Credit Cards. New to all of this? My “introduction to miles and points” book, MilesTalk: Live Your Wildest Travel Dreams Using Miles and Points is available on Amazon and at major booksellers. Is a no preset spending limit good?Some people may assume "no preset spending limit" means you have unlimited purchasing power with that credit card. That isn't the case. Cards without preset spending limits are great—but not that great. Credit cards with no preset spending limit don't have a defined credit limit for that card.
How does Amex no preset limit affect credit score?The less you use up, the better it is for your credit score. However, cards that have no preset limit make it extremely difficult to determine your credit utilization. They have the potential to hurt your credit score as a result.
How does American Express determine spending limit?American Express will still determine a range for what it will allow you to spend up to, based on factors like your monthly spending patterns, your payment history, credit record, and your stated income.
Do all Amex cards have no spending limit?If you have a Consumer or Business Green, Gold or Platinum Card, your Card does not have a credit limit. Instead, your Card has no preset spending limit unless you have been previously notified otherwise. No preset spending limit means the spending limit is flexible.
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What does no preset spending limit mean american express
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