What is a credit limit?
A credit limit is the amount of credit a financial institution or lender is willing to extend to you. It’s the maximum amount of money you can use when you have a credit card. In Indiana, credit card issuers must provide the annual percentage rate on the credit card, as well as the credit limit, to all customers in writing before issuing the card. The credit limit is the maximum amount of money that you can borrow from your lender and the amount of credit available for you to use. The limit may vary from card to card and from lender to lender, but usually, the higher your credit score is, the higher the limit will be. The credit limit may be adjusted if a customer’s creditworthiness changes, and lenders are required to give customers at least 21 days notice of any adjustment. It’s important to make sure you don’t exceed your credit limit, otherwise, you may be charged a penalty fee.
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