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Don't Get A Credit Card Without A Spending Limit Until You Read This

May 12, 2020

Have you heard about credit cards with no pre-set spending limits?

Usually, when you apply for a credit card, the issuer will tell you the maximum amount of money you can spend using that card – this is known as the card’s spending or credit limit and is mostly dependent on factors such as your income and credit history.

However, there is another type of card which has no stated credit limit – it is known as a no pre-set spending limit card.

What exactly is meant by a card with no pre-set spending limits (NPSL)?

While an NPSL card may sound like a great idea, it is not exactly what it seems.

One would think that the holder of the card has unlimited purchasing power but that is not really the case.

NPSL cards do have limits – these are based on various factors such as income, credit, payment history, number of existing credit cards, spending patterns and financial assets of the holder.

However, the difference between a normal credit card and an NPSL card is that the issuer will never tell you what that limit is – moreover, as the variables, mentioned above, change, your card’s purchasing power may vary as well.

Two Advantages

  1. NPSL cards can be an asset for individuals who often charge sizable amounts using their credit cards. For example, a small business owner who frequently purchases raw materials or equipment via his card, an NPSL card can be a boon – the more you spend and pay off through the card, the more you’ll be allowed to spend in the future.
  2. What’s more, if your NPSL card offers rewards as well, then it can be a win-win situation because the more you spend, the more you will earn in terms of cash back, reward points or travel miles.

Three Disadvantages

  1. As mentioned earlier, these cards have no “stated limit” – since you don’t know how much you can charge using that card, certain purchases may be declined if they exceed the limit privately determined by the issuer.
  2. Secondly, the ability to charge sizable amounts comes with a responsibility – you must pay off what you’ve spent at the end of each month. Unless you pay back the amount on time, you may find yourself dealing with late fees and steep interest charges, thanks to the high APRs associated with such cards.
  3. Finally, remember that NPSL cards are usually offered to those individuals who have excellent credit scores – so unless that’s the case, you may not be able to get one in the first place.

Impact on credit score

One of the important determinants of your credit score is the credit utilization ratio – this is the proportion of total used credit to total available credit.

Since an NPSL card does not have any stated credit limit, this card is often excluded from credit score calculations altogether.

Having said that, certain issuers may disclose your highest balance or your current balance as the credit limit.

In such cases, your credit score will be impacted depending on the ratio between your current balance and the figure reported by the issuer as your credit limit.

As discussed already, NPSL cards can help with sizable purchases; however, you need to make sure that you pay back the amount on time.

In case you need to spend a significant amount, but are unable to pay the same back immediately, another option is to approach our team at Fund&Grow.

We offer clients with good credit the opportunity to obtain as much as $250,000 of unsecured credit at 0% for a period of 6, 12 or 18 months.

This amount can be used for anything – from funding a small business to providing down payment on a property.

So, if you need financing, call us on (800) 996-0270, and we will do our best to help you out.


Ari Page Ari Page is the CEO of Fund&Grow. He resides in Spring Hill, Florida with his wife and two children.

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