What’s a No-Limit Credit Card in Canada?

For the ultimate spending power, there’s such a thing as no preset spending limit credit cards. These cards don’t have fixed credit limits, allowing for flexible spending customized to each cardholder based on factors like income, payment history, credit scores, and usage habits.

In this blog post, we’ll review all the background information on these types of cards, plus which Canadian credit cards come equipped with this feature.

What's a Credit Card Limit?

Before we dissect the “no limit” credit card any further, it’s best we explore what a credit card limit is in the first place.

A credit card limit is essentially the maximum amount of money you can borrow from your issuer. In other words, it’s how much you’re able to spend through your card, which is capped at a certain amount depending on factors like credit score, income, and spending patterns. 

As you pay off your purchases, your available credit will replenish, allowing for continuous spending up to your credit limit within the same billing cycle.

If you require a higher spending limit, sometimes, you may request a credit limit increase. Other times, you may even be pre-approved for a credit limit increase as a result of positive financial habits.

Learn more: What Credit Card Limit Should I Have?

What Does “No Limit” Actually Mean?

So, now that you understand the basics of credit limits, we need to define what we mean exactly by a “no limit” credit card.

Truthfully, all credit cards have limits, so when we say “no limit” we’re specifically referring to no preset spending limits. 

No preset spending limit credit cards give members extra flexibility by issuing a credit limit that can constantly fluctuate based on income, credit scores, spending history, and account loyalty (i.e. how long you’ve been a cardholder). These fluctuations can occur monthly to keep up with your ever-changing financial needs.

Sometimes, “no limit credit cards” is also a reference to cards with extremely high credit limits – limits that typically won’t be exceeded because of how much they allow you to spend. These cards are very exclusive and usually come with high spending requirements and are offered by invitation only.

How Does a No Preset Spending Limit Credit Card Work?

Let’s take a closer look at how no preset spending limit credit cards work, plus some useful tips:

The Application Process

Applying for a no preset spending limit credit card is similar to applying for any credit card. This process is usually completed online through the credit card issuer’s official website. Specific application requirements may vary. You’ll also want to keep in mind that many no preset spending limit credit cards recommend good to excellent credit scores and may require higher annual incomes.

Oftentimes, your spending power is determined after approval, based on the personal and financial information you provide in the application.

Your Spending Power

As we’ve mentioned, no preset spending limit credit cards offer significant and flexible spending power that can be altered monthly based on your financial records and habits. But, you’ll still want to keep an eye on how much power you have before making substantial purchases. 

To stay knowledgeable, you can call your credit card’s customer service hotline (usually located on the back of your card) to discuss your purchase plans and spending power. For example, you can ask support whether your planned transaction will be denied or approved, which will ultimately depend on how much the purchase is and how much spending power you have available. Additionally, American Express offers a feature called "Check Spending Power," it's available on their website and mobile app. Here, cardholders can input a potential purchase amount to see whether it will be approved or declined. This is a useful tool that can help you avoid declines on large purchases.

Remaining in-the-know about how much spending power you have can also help you avoid any overspending penalties. 

Balance Best Practices 

As with any credit card, it’s crucial that you pay off your balance for each billing cycle. Since your no preset spending limit credit card comes with more flexibility and power, it’s easier to spend large amounts. The best practices for no preset spending limit credit cardholders is to pay off your balance in full by the payment due date, and to make sure you can successfully cover your balance every month by following a budget to avoid collecting debt.

How Do No Preset Spending Limit Credit Cards Affect Your Credit Score?

To expand a bit further on the previous section, you’ll want to pay off your no preset spending limit credit card’s balance on time (or early) to keep your utilization ratio low for when your credit card issuer reports your spending to the major credit card bureaus (like Equifax and TransUnion). These bureaus use your credit report to determine your credit score.

Since your no preset spending limit credit card doesn’t have a fixed credit limit, a traditional credit limit won’t be reported. This means your payment history will be the most important factor on your credit report – which is why paying off your balance on time is so important.

Benefits of a No Preset Spending Limit Credit Card

Based on everything we’ve covered so far, here’s a brief list of all the benefits that come with having a no preset spending limit credit card:

• More flexibility to make bigger purchases: with a customizable high-spending cap on your card you can spend with ease without being confined to a strict spending limit.
• Spending limits may increase with good payment practices: essentially, get rewarded for good financial behaviour. The better your payment habits, the bigger your spending limit.
• No preset spending limit cards often come with better perks: to balance out expensive costs and high spending requirements, these cards are often loaded with tons of perks to make up for your expenses.

Drawbacks of a No Preset Spending Limit Credit Card

Likewise, here are some of the drawbacks of owning a no preset spending limit credit card:

• An ever-changing spending limit can be confusing: since your spending limit can vary on a monthly basis, you have to constantly check-in with your credit reports to make sure you're using your card responsibly and strategically.
• There’s a higher risk for overspending: more freedom often means more risk. In this case, high spending limits promote higher spending overall, which can lead to overspending or difficulty in paying off your balance.
• Higher Qualifications: since these cards are a premium option, they can come with higher income and spending requirements, and at times higher annual fees. 

Who Should Have a No Preset Spending Limit Credit Card?

You’ll fit the no preset spending limit credit card profile if you consistently have high expenses, are a frequent traveler, or a business owner. To be a successful cardholder in this category, you’ll need to make sure you're able to pay off your large balances monthly. Sometimes, you'll also need a higher annual income to boost your credit limit. Additionally, it’s recommended that you have a good to excellent credit score, although this is simply an estimate that will vary from card to card.

Ultimately, if you’re a big spender looking for less limitations and exclusive perks, this could be the credit card category for you.

Best Canadian Credit Cards With No Preset Spending Limits

Before this blog post comes to a close, let’s review some of the best no preset spending limit credit cards available in Canada, both of which you’ll find come from the American Express network. These two cards function primarily as charge cards. Charge cards differ slightly from typical credit cards. They don't allow balances to be carried over, so you'll need to make sure you pay off your balance in full each month by the due date. However, you can use the American Express Flexible Payment Option feature that allows you to pay off certain portions of your balance over time, enabling them to act similar to credit cards.

American Express Platinum Card

If you’re willing to pay a premium for plenty of perks – specifically geared towards luxury travel – then the American Express Platinum Card is the no preset spending limit credit card for you.

With leading points per dollar spent on dining and travel purchases, comprehensive coverage across multiple categories, and exclusive benefits like dining and travel credits, hotel upgrades, and unlimited access to the American Express Global Lounge Collection, this card is all about decadence and indulgence.

American Express Business Platinum Card

For the business-oriented members, this card earns you points per dollar spent on all purchases, extensive travel and purchase insurance, and an interest grace period on your balances.

Like the American Express Platinum Card, you can take advantage of perks like unlimited access to the American Express Global Lounge Collection, an upgrade to Marriott Bonvoy Gold Elite status, and a travel credit.

Along with the exclusive interest grace period, the American Express Business Platinum Card also provides business statement credits and wireless statement credits.

Conclusion

A no preset spending limit credit card gives you more flexibility to make larger payments that complement your financial lifestyle. The ideal cardholder is someone who’s a big spender, a high earner, and responsible with their credit. If you match this profile, you can take advantage of customized credit limits and exclusive perks on participating cards.