Are all American Express cards the same? A card’s a card, right? Why do some cards have a credit limit and some don’t?

Most people don’t give too much thought to these questions, but it’s important to understand the difference because credit cards with and without a spending limit are two very different financial tools.

You can swipe either one at the store, but you’ll see the difference when you get your bill.

Depending on your situation and financial needs, one of these can work better for you, so it’s important to understand the difference when you are deciding on your next card. In short, with a regular credit card you can pay a balance over time.

However, we don’t advise anyone to carry a balance because, typically, you’ll incur interest charges.

With a card that doesn’t have a pre-set spending limit, the balance is due in full each month, unless you have Pay Over Time feature (more on this later). Another notable distinction are the annual fees. Cards that don’t have pre-set spending limits are more likely to have annual fees than regular credit cards.  

So these are the main distinctions between the two financial products, but let’s have a look at some other differences between the two types of cards.

What is a Credit Card?

A credit card has a set credit limit, so you know exactly how much you can spend every billing period. You are also not required to pay your balance in full every month and can carry the balance from one billing cycle to the next.

There’s usually a minimum payment required each billing cycle and the unpaid balance at the end of a billing period will incur interest charges. Basically, the consumers have the choice to pay the entire balance, or to break it up and pay it over time and pay the added interest charges.

The credit limit is determined based on financial details and information that Amex collects from your application.

Why No Pre-set Credit Limit?

So why should we be paying attention to the no pre-set spending limit cards? It usually means greater buying power as well as having to pay the card balance in full every month.

However, no pre-set spending limit doesn’t mean unlimited spending capacity (often a source of common misconception). Some would take it to mean that unlimited and uncapped purchases can be charged to the card. However, having no preset spending limit just means that the credit limit is not set in stone, but rather is changing from month to month.

The purchasing power could adjust over time depending on how you use the card, combined with your payment history, credit record, financial resources and other factors, such as current economic climate.

If you are about to make a large purchase, it might be a good idea to check your spending limit. It’s easy enough to do straight from the home page of your Amex account. After you login, click on the Check Spending Power link on the right then enter the amount you are about to spend on the next page.

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With no pre-set limit cards, no interest is charged because the balance is paid in full each month. However, there are fees for late payments.

Whether you are looking for a personal or a business card, this type of card can help manage cash flow over short periods and, because there’s no pre-set spending limit, can provide the buying power for larger purchases. This type of card is a good choice for someone who is comfortable paying the balance in full each month and is looking for a flexible spending limit.

Because there’s no preset spending limit, a large purchase won’t affect your credit score. The utilization ratio (total outstanding balances divided by total available credit) accounts for a significant portion of your FICO score (about 30%) and because cards don’t have a credit limit, it’s impossible to calculate a utilization ratio.  

What does this all mean in practical terms? If you have a large purchase such as a medical bill, home improvement expenses or a large business purchase, putting it on a card with no pre-set spending limit won’t have a negative impact on your credit score. The balances are still reported to the credit bureaus, but they won’t be included in the utilization ratio calculation.

Amex Credit Cards

Consumers have a lot more choices when it comes to Amex credit cards. American Express offers both personal and business credit cards that earn cash back, airline miles, hotel points and Membership Rewards points.

These are the personal credit cards offered by American Express:

In addition to offering great personal cards, Amex offers a wide array of excellent business cards. Whether your business will benefit from a cashback card or a card that offers airline miles or hotel points, Amex has you covered.

These are the business credit cards offered by American Express:

No Pre-set Spending Limit Cards

There are just a few of this type of cards among Amex’s vast array of card offerings. All come with an annual fee of at least $150 (American Express Green Card) and up to $595 (Business Platinum Card from American Express). To be approved for one of these cards you usually need to have a good or excellent credit score.  

These are personal cards offered by American Express that don’t have a pre-set spending limit:

And these are the business cards offered by American Express that don’t have a pre-set spending limit:

Recently Amex introduced a “Pay Over Time” feature. These cards will come auto enrolled with Pay Over Time:

This new feature allows eligible purchases over $100 to be treated as if they were made with a credit card (up to the Pay Over Time Limit). That means these purchases don’t have to be fully paid off at the end of the billing cycle and are subject to interest charges.

Can I Have Both a No Pre-set Spending Limit Card and a Credit Card?

The short answer is yes. American Express offers a wide variety of cards, with or without an annual fee. There are co-branded cards, cash back cards and cards that earn one of our favorite transferable currencies, Membership Rewards points.

You can have up to 4 Amex credit cards and up to 10 no pre-set spending limit cards. If you already have four credit cards, and would like to get another card, you’ll have to close one before applying for a new Amex credit card. Please note that these rules are subject to change by American Express at any time.

Our Favorite American Express Cards

Some of our favorite personal credit cards include Hilton Honors American Express Aspire Card, Marriott Bonvoy Brilliant™ American Express® Card, American Express® Gold Card and The Platinum Card® from American Express. On the business side, we are big fans of the no fee Blue Business® Plus Credit Card from American Express for its excellent no fuss earning structure and The Business Platinum® Card from American Express for its many perks and benefits.

Pro tip: Don’t be afraid of the high annual fee cards. The cards that come with high annual fees are packed with benefits that will help offset the annual fees such as airline credits, lounge access and Global Entry and TSA Precheck credit.

Final Thoughts

When picking a new card we usually look at the welcome offer, bonus spending categories and the card’s perks, such as lounge access or Global Entry and TSA Precheck reimbursement, but the type of card we are applying for usually isn’t considered at all. You should always weigh which type of card is better for your current financial situation.

The cards with no pre-set spending limit don’t extend credit and you are expected to pay the balance in full every month, unless you choose to take advantage of the new Pay Over Time Feature. Additionally, these cards come with annual fees and you’ll need a good credit to get approved.

In contrast, there is a much wider variety of credit cards with or without the annual fee. Credit cards allow you to pay off your purchases over time, but you’ll usually be charged interest.

Travel well,

Anna