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What is a high limit credit card?
A high limit credit card is a credit card with a higher than normal spending limit. While there is no hard and fast rule as to what defines a ‘high’ limit, generally speaking, you might expect it to be over $20,000 and up to $100,000. Some so-called ‘charge cards’ might even have no pre-set spending limit.
Cards of this nature typically come with a variety of perks. These could include frequent flyer or reward points (sometimes uncapped) in exchange for spending, bonus points on sign-up, and travel-related rewards – ranging from airport lounge access through to free domestic or international travel insurance.
Given the high spending limit and the perks that are on offer, these kinds of cards may also come with high annual fees, interest rates and stricter eligibility requirements than other kinds of credit cards.
What are high credit limit cards used for?
High limit credit cards might be useful for individuals or businesses looking to make large purchases with credit rather than cash. There are a variety of reasons why an individual or business might choose to do this. It may be that the reward points on offer for large purchases are attractive, or it may be convenient for the cardholder to make a large purchase on credit rather than paying cash.
High limit credit cards can also be used for balance transfers. A balance transfer is a way of consolidating debt. A cardholder who has debt across multiple credit cards could transfer the balance of all these cards onto one to avoid paying multiple sets of fees and potentially take advantage of a balance transfer offer.
If you are considering applying for a high limit credit card for your own use, it’s important to keep in mind that credit cards must be used with care. These kinds of cards are generally suited to people who pay off their full balance from month to month and therefore avoid very high interest charges on unpaid balances.
What are some types of credit cards with high limits?
There are several different types of high limit credit cards on the market, including:
- Gold, platinum and black credit cards. Premium credit cards like these may be offered to high income earners or big spenders, and may come with many of the perks listed above. As mentioned, because these cards come with high interest rates, they may be suited to cardholders who pay off their balance in full each statement period to avoid hefty interest charges.
- Business credit cards. Some high limit cards are aimed at business or corporate customers, and come with features ranging from the ability to have multiple linked cards for employees, through to integration with cashflow management software, higher point earn rates for ATO and government spending and business travel-related perks.
- Charge cards. Charge cards are a particular type of credit card that require the cardholder to pay the balance in full each month. This makes them distinct from other kinds of credit cards, which typically allow you to carry a balance and be charged interest on it. Charge cards come with no interest or preset spending limit and can still earn reward points. The strict requirement to pay the balance in full each month may make them unsuitable for some individuals or businesses.
- Balance transfer credit cards. If your goal is to consolidate the debt from various credit cards into one, a credit card with a balance transfer offer may be suitable, as these kinds of cards can have offers that allow you to pay off your debt interest-free for a limited time. If you are considering this, it’s important to find out the card’s balance transfer limit, which is the maximum balance you can move onto a new card with a 0% balance transfer offer.
