How do unlimited credit cards work?

While some credit cards market themselves as ‘unlimited’ in terms of spend limits, the reality is usually more complicated than that. In Australia there are a number of charge and credit cards that come with no preset spending limits. If you are tired of hitting your monthly limit, love premium rewards programs and exclusive lifestyle benefits, and have an excellent credit history, you might find one of these financial products worth considering. 

A credit card with no preset spending limit can provide you with the credit to make large purchases; but of course, you’ll eventually have to pay it all back. Interest rates may also apply if you don’t pay your card off in full each month. These credit cards can also provide you with many benefits and rewards points you wouldn’t always receive with a simple debit card. Read on below to learn about a selection of Australia’s current credit cards with no preset limit.

Credit cards vs charge cards

Before delving into credit cards that come with no advertised limit, it’s important to clarify the difference between a credit card and a charge card. Credit cards are very common – Visa and MasterCard are two of the main payment companies, and most banks will sell one of these credit card products. Their key feature is allowing you only make a minimum repayment at the end of each month; you can maintain a continued balance of debt over multiple billing cycles, and you’ll be charged interest on this debt. Credit cards typically come with a set credit limit each month to prevent customers from potentially accruing dangerously high levels of debt, which they may be unable to pay back.

A charge card, by contrast, is a card which you must pay off in full at the end of each month, or else be subject to late fees and restrictions. As a result, charge cards typically have no credit limit each month, since you’ll likely be restricted from spending more until you pay off your monthly debt. Charge cards are much less common than credit cards nowadays – the best-known charge card providers are Diners Club and American Express, although they are offered by several other providers.

Credit cards with no preset credit limit

Just about every credit card with no preset limit is an expensive, premium card. These products almost universally include significant bonuses, such as a concierge service, airport lounge privileges, various insurances, rewards points and much more.

You can generally expect to pay a significant annual fee for one of these cards, as well as a hefty interest rate. Moreover, some flagship credit cards – such as ‘Platinum’ or ‘Diamond’ – come with minimum credit limits: a minimum amount you need to spend each month to keep using the card, usually several thousand dollars.

It is also worth noting credit cards with no preset limits don’t simply give you unlimited purchasing potential. A ‘no limit’ credit card simply means that the credit provider has not set a universal monthly limit for all customers. A bank will still negotiate an individual credit limit for each customer based on their ability to pay, including credit history, income and expenses; if you have a high income with few expenses, then your limit will probably be very large!

Some providers have a policy of not sharing spending limit details with the customer and will approve transactions at their discretion. Each customer’s credit limit is usually determined based on a number of factors, including income levels, payment history and historical spending behaviour.

Below is a full list of credit cards in the Canstar database with no maximum credit limit, accurate as of October 2017:

Pros and cons of a credit card with no preset spending limit

There are several advantages and disadvantages to having a premium credit card with no preset spending limit, which we’ve summarised for you below:

Pros

• Convenience of having no preset limit on your spending
• Extensive rewards program, with points redeemable for many items and services
• Potential to save some money through use of complimentary card services such as a concierge service and insurance benefits

Cons

• No preset spending limit can encourage some people to spend beyond their means and incur hefty interest payments
• Higher interest rates and annual fees than most credit cards
• Customers may not use all the included services and rewards

A credit card with no preset spending limit can be a valuable and convenient tool if you make a lot of purchases each month, with many rewards and benefits on offer – just beware of the extra costs that often come with it! To find out more about premium credit cards with no preset spending limit, check out the highest-rated products on the Canstar website:

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