What is a credit limit?
A credit limit is the maximum amount of money you are allowed to spend using your credit card before you must pay off some, or all, of your balance. Credit limits are determined by credit card companies and are based on various factors such as your credit score, income, and past payment history. In Tennessee, State Law dictates that no individual may be issued a credit card with a limit greater than $3,000. This is to ensure that credit card companies do not issue more debt than most people could reasonably pay off. This protection also applies to minor children, as they are not legally allowed to have a credit card with a limit greater than $500, or an amount which their parents deem appropriate. Credit limits are there to help protect both the consumer and the credit card company, and it is important that consumers understand their credit limits in order to avoid making costly mistakes.
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