High limit credit cards let you carry a larger open balance at one time, which means you can make larger purchases. If you have a credit card with a $500 limit, then you can’t make a single purchase of over $500 on it, because you have to pay down the balance before you can spend more on the card. High limit cards let you spend thousands or more at a time or carry a balance of that much without accruing over limit fees.
These higher limits can make life easier, but you have to know how to put these cards to work for yourself to get the best benefits. Luckily, we’ve pulled together what you need to know before you apply for and use a high limit credit card.
Pros and Cons of High Limit Credit Cards
An obvious benefit of high limit cards is that you have more flexibility in how you spend with them and manage the balances. That’s even more true if you’re able to land a high limit credit card with an introductory 0 percent APR offer.
Imagine that you get a credit card with a $5,000 limit and a 0 percent APR offer that lasts for the first year. You could finance a purchase up to $5,000 and pay it off over the course of a year without paying any extra fees or interest. That means you could finance a used car, minor kitchen reno, new bedroom furniture or upgraded technology for a home office without interest.
The Best Perks in the Business
Another benefit of high limit credit cards is that they tend to come with some of the best perks in the business. The travel rewards or airline cards with higher limits, for example, come with perks such as anytime access to airport lounges (that’s a value of a few hundreds dollars) and extras like free checked bags and concierge services.
There’s a reason these cards offer some stellar perks. With high spending and balance limits, the card companies can count on some members carrying over large sums from statement to statement — which results in high interest earnings for the banks. But you don’t have to carry over balances to make out like a bandit with these cards, which means you can enjoy the perks without paying those extra fees if you’re smart about it.
Annual Fees Are Typical
The one common disadvantage associated with high limit cards is the annual fee. Most of these cards do come with an annual fee, and the elite cards have annual fees that run as high as $550. Other cards with large spending or balance limits may have fees starting as low as around $100 per year.
This con isn’t a complete obstacle, though. Many times, the value of the perks and rewards associated with your card outweigh the annual fee by a large percentage. When choosing a credit card, it’s all about comparing the cost with the return on investment and deciding whether you’re likely to come out positive in the end — and that’s definitely the case with many of these types of cards if you’re a high spender or frequent traveler.
Why Are These Cards High Limit?
In many cases, high limits are offered when a credit card company teams with a hotel or airline to offer a co-branded card or teams with a bank. With two brands backing a card, they are able to take on more risk, which translates into higher credit limits (and often, more potential rewards for the qualified and responsible account holder).
Some high limit cards are really just cards without a preset spending limit — which is the case with American Express Charge cards. The lack of a present spending limit doesn’t mean that you have unlimited buying power with your card; it simply means you don’t have a hard stop credit limit as you do with other cards. How much you can actually spend depends on a formula that takes things like your credit history, account history, income, and spending and payment habits into account.
Typically, high limit cards or those without preset spending limits are offered to individuals who have an excellent credit history and a strong financial situation.
Best Signup Bonus Cards
High limit cards are great in that they let you make big purchases and provide more flexibility in how you can spend, but they’re even better when they’re also rewards cards. Coupling your big buying power with some of the best signup bonuses in the business can net you a ton of rewards and free stuff.
The best signup bonus cards that are also high limit cards come with huge mileage or point payouts if you reach the spending requirement in time.
For example, you might have a card that offers 75,000 miles or points if you spend $5,000 in the first three months that you have the card.
You’ve probably got a high limit credit card for a reason, in which case $5,000 is probably going to be easy to reach. But if you’re worried about making the signup bonus, take a look at some quick math.
- $5,000 in three months is just $1,666.68 per month.
- If you spend $200 a week on the family grocery bill, you’re almost half way there!
- You can easily make the signup bonus if you use your card to cover regular expenses such as groceries, gas and utility bills.
A high limit credit card also makes it even easier to land the signup bonus — even if you have to spend a bit more to get there — because you can make large purchases you were already planning and use your card to pay for them.
Once you earn the signup bonus you could be looking at hundreds or even thousands of dollars in travel rewards or cash back, depending on which card you signed up with.
Best Point Rewards Cards
A card that comes with a signup bonus comes with continuing rewards in the form of miles or points. You typically earn those points by spending money with your card, though the exact details vary from offer to offer. Some example offers include points or miles structures such as:
- One point for every dollar you spend
- Five points for ever dollar spent on airfare with a specific airline, three points spent on select other travel categories, and one point spent on everything else
- Five points for every dollar spent on certain categories, which change every quarter, and one point for every other dollar spent
The best rewards cards provide some flexibility for redeeming all the points you earn. The value of the points or miles typically depends on how you redeem them, with the highest value saved for redemptions specific to the program. For example, if you’ve got a high limit credit card co-branded by Delta, you’ll get the most value when you use your points to book flights with Delta.
Other common redemption options include:
- Covering various travel expenses, including hotels, airfare and rental cars
- Gift cards
- Cash back (in the form of a statement credit)
Best Benefits From High Limit Cards
We’ve already noted that high limit cards often come with a lot of extra perks, but just what can you expect other than the ability to rack up rewards and get free stuff? Here are some common perks associated with elite high limit cards.
- Stellar purchase and fraud protection. The bank obviously wants you to spend more money with their card, but they don’t want anyone else getting in on the action. The best high limit cards come with excellent fraud preventions and a plan for notifying and protecting you if fraudulent activity does occur. They also have some great purchase protections, including things like refund guarantees and extended warranties.
- Top travel protection. Many of the best high limit cards are travel rewards cards, and that means they cater to people who like to hit the road (or the skies) a lot. Some common perks include trip interruption insurance, baggage delay or loss insurance and rental car insurance — all of which can save you money and add peace of mind to any trip you pay for with your credit card.
- Concierge perks. These types of cards are typically reserved for high spenders with great credit limits, and the perks make you feel special too. They include things like access to VIP opportunities and 24/7 hotlines for assistance with travel planning, event tickets and shopping.
- Lack of foreign transaction fees. Because these cards are often targeted to travelers, many come without the 3 to 5 percent foreign transaction fee associated with other cards. That means you can swipe in international locations without paying any more than the cost of your goods or services.
How much value you get out of a high limit credit card account typically depends on how much you spend — and whether you know how to put your rewards to good work. These types of cards are a good choice for small business owners who want to fund everyday business expenses with a card, frequent travelers who want a solid payment companion in their wallet and anyone who spends often and would like to earn cash back or other rewards when doing so.