A no-limit credit card is one with no spending cap on it, provided you pay your bills in a timely fashion. American Express or Amex is probably the best known of the credit cards to offer no spending limitations. When they first did so, borrowers were expected to pay their full balances at the end of each month. Now Amex frequently allows for flexible payments, and they may limit spending if payments are not adequate.
A number of credit card companies now offer a no-limit credit card to people with near perfect credit and with significant amounts of income. This can be a blessing or a curse depending on interest rate, and on how wisely you use credit. On the one hand, a huge unexpected expense can be easily met with a no-limit credit card. Conversely, you can rack up huge bills with profligate and reckless spending, in a very short period of time.
Another disadvantage to this type of credit card may not be apparent to most people, but it is something noted by organizations like The Motley Fool, which is expert in many issues of finance and investment. Part of your credit score, about 30%, considers the amount of money you have borrowed, and the limit on your present credit cards. A no-limit credit card company may report your limit as $0 if you have not used the card, or they may report a maximum limit available to you. They may not, nor are they obligated, to report times when you put tons of expenses on a credit card and then paid them off.
While some companies will report your timely payments and paid off amounts, others simply report an extremely low limit. For instance if you spent $100 US Dollars (USD), your limit might be considered $100 USD, or it may merely be reported as zero. You’ll need to check with a credit card company on how they report payments and limits on a credit card with no limit before you obtain one. Some people who are scrupulous are paying off their cards at the end of each month suffer major losses to their credit score, without even realizing it, if their spending ability is rated at zero, or their payments don’t count toward showing credit worthiness.
There are some other reasons why a no-limit credit card might not be your best bet, though there are some good reasons to have one too. You might not want a no-limit card if you do have trouble paying your bills or if you pay a higher interest rate for unlimited purchasing power. Of course, it may make sense to have one, especially for a business, if you conduct the majority of your business on credit, paying the balance at the end of each month. It makes for fairly easy accounting, and can help you spend more as needed, if your business grows.