In 2022, four out of five small business owners were concerned about rising costs. Close to 8,000 small businesses responded to the Small Business Credit Survey, resulting in some interesting statistics. These insights may explain why many businesses are now showing interest in credit cards with no preset spending limit.
Nearly half of the small businesses participating in the survey were struggling to meet operational expenses or experiencing uneven cash flows. The good news is that the number of businesses operating at a profit increased for the first time since 2020. There is hope, but you may still consider a credit card with no preset limit as a fast way to give your business a little more financial security.
To help you make an informed decision, this guide will explain what "no limit credit cards" really are, how they work, and how to choose the right credit card offer for your business.
Do no limit credit cards exist?
A “no limit credit card” doesn’t exist, but the term is used to describe a type of card that has a flexible, rather than preset, spending limit. Unlike with a regular credit card, the limit on these cards fluctuates monthly based on factors like your credit score, income, and payment history. If you make regular purchases and consistent payments, you’ll probably receive higher spending limits. On the other hand, missed credit card payments, reduced income, lower profitability, or a poor credit history could lower your credit limit.
Occasionally, the term “no limit credit card” is also used to refer to cards with very high credit limits. Invitation-only “black cards” are a type of highly exclusive credit card that comes with extremely high credit limits and spending requirements. The most popular card in this category is the American Express Centurion® Card, which comes with an invitation fee of $10,000 and an annual fee of $5,000.
What’s the appeal of no limit credit cards?
The concept of unlimited spending power holds a certain mystique, especially for those accustomed to managing their finances within the constraints of a budget. The idea of wielding a no-limit credit card taps into a universal fantasy of affluence and financial freedom. This fascination is fueled by pop culture, which glamorizes the lifestyle of the ultra-wealthy, presenting a world where financial limitations are nonexistent.
Do business credit cards have spending limits?
Yes, business credit cards usually have spending limits based on your business's financial standing and creditworthiness. Some cards offer flexible or higher limits to accommodate business expenses, while others feature a "No Preset Spending Limit" (NPSL), which adjusts based on usage, payment history, and other factors.
How much can I spend on a credit card with no preset limit?
Most credit card providers won’t list their maximum limits before you apply. Instead, your credit limit will be determined after you’ve been approved. Having excellent credit and applying for cards that are known for having high limits increases your likelihood of landing more spending power, but you should choose a card with benefits and rewards that suit your business regardless of its limit.
Pros and cons of credit cards with no preset spending limits
| Pros | Cons |
|---|---|
| Greater flexibility to make large purchases without worrying about rigid spending limits. | Must pay off monthly to avoid high interest. Some cards, like the Amex Plum Card, allow cardholders to carry a charge for up to 60 days with no interest fee, so you can pay over time. |
| Higher spending limits are offered with good payment history. | Spending limit is undisclosed and variable, so it may change month-to-month. |
| A card with no preset spending limit can offer security against rising operational costs. | Higher risk of overspending due to lack of fixed limit. |
| Large purchases mean more substantial perks, whether in the form of cash back, redeemable rewards, or statement credit. | Complex fees and potentially higher annual charges than regular cards. |
Can you build business credit with no preset limit credit cards?
Like with other credit cards, making regular, timely payments on your high-limit or no limit credit card can build your credit score. Most credit cards report to the major business credit bureaus, thus helping to build your credit history.
One of the main factors in determining your credit score is your credit utilization ratio, which refers to the percentage of available credit that you have spent. Keeping your utilization below 30% is generally considered ideal.
Something to keep in mind is that credit cards with no preset limits usually don't disclose their maximum spending limits, so the available credit on those cards won’t be included in your credit utilization ratio. This means that you may not receive the same benefits you otherwise would on your credit report for spending below your available credit.
How to get a credit card with no preset spending limit
Applying for a no preset spending limit credit card is similar to applying for a standard business credit card, which is usually done online. Most banks and lenders aren't too flexible with extending limits beyond $25,000.
Before submitting your application, consider some factors that may influence your decision:
- Intended use: What expenses do you plan to charge on your no-limit credit card, and how often do you expect to use the card?
- Financial need: How much do you anticipate charging on your business credit card every month?
- Repayment and responsibility: Can you use your card responsibly and pay off the full card balance every month?
To choose the best business credit card for your business, compare the terms of all the available cards. Consider the rewards programs and perks, and fees like interest rates, foreign transaction fees, and balance transfer fees. Be sure you understand what terms apply to each card.
Alternatives to no preset spending limit credit cards
While credit cards with no limits offer convenience, they may not be ideal for every business. You might not feel comfortable charging large sums of money and assuming the obligation to repay it every month. Additionally, if your business doesn't involve significant travel or you don't expect to spend enough in the first three months to take full advantage of welcome rewards, these cards might not be the best fit.
In that case, you can consider a corporate charge card from Ramp as an alternative. While these cards have preset spending limits that you cannot exceed, you can set the limit as high as you want. If you wish for it to function like a no-limit credit card, simply set a higher limit than you anticipate your business will actually reach in a given month.
Ramp lets you issue unlimited free employee cards, and you can set spending limits to keep every member within the budget. AI insights will help you spend smarter with little effort, and automation makes it faster than ever to close your books without human error.
