When considering a credit card with spending limits, one couldn’t be blamed for thinking about the maximum amount of money available for card use.  After all, most every credit card comes with a preset expenditure threshold that isn’t supposed to be breached.  However, there are at least three different types of spending limits which can control how a credit card is used.  This article will cover each of these types of limits in more detail.

1. Credit Limit

The credit limit is the type of limit most people think of when referring to a spending limit.  This monetary restriction dictates the maximum amount of money that can be charged to an account within a specified period of time.  Going over the credit limit will incur penalties such as over-the-limit fees, interest charges, a negatively impacted credit score or the possibility of the account being cancelled. Credit limits are typically set by the card issuer and reflect how the issuer judges the user’s ability to repay any outstanding balances.  Employers can also set credit limits on their employee charge cards to restrict the amount of money available for an employee to spend.

2. Purchase Category Limit

The ability to limit purchases to specific categories is a feature mainly found on business credit cards issued by an employer to their employees.  The purchase category limit can be used to ensure employees are unable to use the company cards for unauthorized purchases. Company administrators may, for example, issue cards that can only be used to pay for fuel or hotel rooms.  Attempting to make charges outside the approved purchase categories will result in denied transactions.

3. Time Limit

Another type of limit that can be set by business credit card administrators is a time restriction.  This may mean that a card is only functional during specific times of day, on certain days or for a specified length of time.  For example, many virtual credit card numbers only allow for a single use after which they expire. Time limited cards are also effective when issued to contractors or temporary employees.  Administrators can protect against card misuse by matching the card expiry date with the end of the contract term.

Emburse Credit Cards

Emburse now offers a credit card with spending limits that can be set by company administrators.  To learn more about how the Emburse expense management system can work for your business, get in touch for a free demo today.

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