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Credit cards give people a certain amount of flexibility when it comes to financing purchases, but there are generally limits to how much you can spend.
One issuer, however, is easing these traditional restrictions for a new credit card. American Express recently launched the SimplyCash Plus Business Credit Card, a no annual fee credit card that lets business owners spend beyond their credit limit in order to fund larger purchases. No fees or new credit inquiries (typically conducted by issuers if a cardholder requests a credit limit increase) apply.
How It Works
Going over your credit limit generally isn’t considered a smart spending habit (more on that later), but Amex has put some systems in place that could help business owners avoid accruing too much debt. The amount that can be spent over the credit limit, for instance, will vary from cardholder to cardholder and adjust based on their card use, payment history, credit record and other factors, the issuer said in an email.
Cardholders can check whether a particular purchase is possible through a tool in their online account or by calling Amex directly. But here’s something very important cardholders will want to note: Whatever extra amount does get charged is considered due in full at the end of the month. And, if it isn’t paid off, cardholders will incur a late fee and their entire balance will be subject to a penalty APR (currently listed at 29.49%).
This APR will go back down after the cardholder has made 12 consecutive payments by the due date. And, even if the cardholder has a penalty APR, they can avoid interest charges on any amount above the credit limit so long as they pay their entire minimum payment due by their statement’s closing date, Amex said.
When it comes to general terms, the card’s standard annual percentage rate is 12.49%, 17.49% or 19.49%, depending on creditworthiness, though Amex is currently offering a 0% introductory APR on purchases for the first nine months an account is opened. The card does offer a rewards program, touting 5% cash back on up to $50,000 worth of purchases at U.S. office supply stores and wireless telephone services; 3% cash back on a category of choice (culled from eight Amex options); and 1% cash back on all other purchases. (You can earn rewards on purchases over your spending limit, Amex said, so long as you pay the balance as due that month.) The card will be available to small businesses in spring 2016.
The Pros & Cons of Business Credit Cards
While a free over-the-limit credit feature may seem odd to some consumers, keep in mind, Amex’s new addition was designed for business owners looking to better manage cash flow — not personal shoppers looking to splurge on a new pair of Jimmy Choos they really can’t afford. (According to a press release, 76% of the 1,001 small business credit cardholders the issuer surveyed said it would be beneficial for their business to receive an increase in their credit cards’ spending limit at least once a year.)
Still, business owners should be sure to understand the terms and conditions associated with any piece of plastic they are looking to use. They should also carefully consider what they are charging on it. Remember, business credit cards are exempt from many protections provided by the CARD Act. Plus, you’re generally considered personally liable for the purchases you make and any debt incurred is likely to still appear on your credit report.
When it comes to Amex’s new SimplyCash Plus card, missed payments and high balances could negatively affect your score, but you don’t have to worry about being penalized specifically for going over your credit limit. While the balances and payment history on delinquent accounts may be reported to the three major credit reporting agencies, credit limits are not, Amex said. (Balances and payment histories on accounts in good standing are reported to business credit reporting agencies, not consumer ones, Amex said.)
Remember, as a general rule of thumb, it’s a good idea to pay all credit card balances in full each month, so as not to incur interest. And you want to keep your balances below at least 30% and ideally 10% of your total available credit for best credit scoring results. You can see how your current credit card balances may be affecting your credit scores for free on Credit.com.
At publishing time, American Express credit cards are offered through Credit.com product pages, and Credit.com is compensated if our users apply and ultimately sign up for these cards. However, this relationship does not result in any preferential editorial treatment.
Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.
More on Credit Cards:
- Credit.com’s Expert Credit Card Shopping Tips
- How to Get a Credit Card With Bad Credit
- An Expert Guide to Credit Cards With Rewards