Certain credit cards are advertised as no limit credit cards, or as no preset spending limit (NPSL), but that doesn’t mean you have the freedom to go out and charge $1 million worth of new shoes. In fact, it’s highly unlikely you’ll be able to charge $1 million worth of anything using a credit card with no preset spending limits, as a no preset limit does not translate to unlimited spending.
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Even credit cards touted as having no preset spending limit may have certain restrictions. The restrictions may not be as boldly noted as the credit card’s benefits, but they may still exist in the fine print. An over-the-limit fee may be charged for going over your credit limit, according the Federal Reserve, whether your credit card has a preset spending limit or not.
Watch the Details in the Fine Print
The fine print of your credit card agreement spells out the small and often-overlooked details that can be dangerous to overlook. This includes restrictions on your spending limit even on no preset spending limit credit cards.
One credit card that boasts no preset spending limit is the American Express ZYNC credit card, according to the American Express website. Check out the fine print, however, and you find the clause is immediately followed by an explanation.
The explanation says your spending limit is adjusted based on your credit history, credit card record, and your spending habits.
A footnote attached to the explanation further explains how a preset spending limit does not mean you have no limits on your spending. It simply means no preset limit is written in stone for every applicant, but each applicant will receive a present limit based on his or her credit history and other factors.
Tricky Language That Credit Card Companies Use
American Express’s ZYNC credit card also boasts that it has no interest. Consumers need to realize that “no interest” does not mean 0% interest, or 0% annual percentage rate. If you read the fine print once again you’ll see that “no interest” means no interest if you pay off your balance in full each month. Since you are only charged APR if you roll a balance over from month to month, “no interest” for paying off your balance in full each month applies to any credit card on the market.
If you did indeed have a credit card with 0% APR, you would not be charged interest even if you failed to pay off the balance in full each month and let your debt roll over to the next month. Although 0% APR may exist for an introductory period on some credit cards, it is not common for a credit card to have 0% APR for the entire life of your account.
One more thing to note on American Express’s ZYNC credit card “no interest” clause is the footnote. The footnote says eligible applicants might have the option of carrying over a balance for specific charges approved by American Express, but that balance may be charged interest. The wording of the footnote suggests you must pay off your balance in full each month as part of the credit card agreement.
Please note this important information is buried in a footnote rather than highlighted in bold like the no present spending limit is.
What You Should Know About No Preset Spending Limit Credit Cards
Credit cards with no preset spending limit can actually work against you on your credit score, the About Credit website says. Although no preset limit credit cards may require good to excellent credit scores and may allow a high amount of credit, there is no standard way for companies to report the information to the credit bureaus.
When asked about your credit limit, credit card companies that issued credit cards with no preset limits may report your limit in one of three ways. They can report absolutely nothing, they can report the highest balance you’ve owed, or they can report your current credit limit with them, which may fluctuate over time. If the report goes in when you owe a lot of money or have a low credit limit for whatever reasons, it can reflect negatively on your credit report.
If the company reports absolutely nothing, it’s as if that credit card does not exist. The information is not factored into your credit report. Finding out how a no preset limit credit card company would report your credit limit can help you decide if a no limit credit card is right for you.
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