What is a credit limit?
A credit limit is the maximum amount of credit a financial institution or lender will allow a customer to have on a credit card account. Credit limits are determined by a customer’s credit history and credit score. Credit limits in California are regulated by law, as part of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (the CARD Act). This act protects consumers by requiring credit card issuers to disclose information about the terms of their credit cards, and giving customers additional protections against unfair and deceptive practices. According to the CARD Act, credit card issuers are required to provide clear and concise information to consumers about their credit card terms, including information about the credit limit. This information can be found in the customer’s credit card agreement or on the statement sent out each month. The credit limit is the maximum amount that the customer can spend on their card and is generally a few hundred to several thousand dollars. It is important for consumers to understand their credit limit, as it helps to prevent them from overspending and getting into financial trouble. Additionally, if a customer exceeds their credit limit, they may be charged an over-the-limit fee, and their credit score could be affected. To stay within their credit limit, consumers should keep track of their spending and make sure to pay their bill on time each month to avoid any extra fees or penalties.
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