Credit Limit
The maximum amount of credit that a financial institution or other lender will extend to a borrower.
More Details
A credit limit is the maximum amount of money that an individual or entity is allowed to borrow using a credit card or other type of credit. A credit limit is determined by the lender and is based on factors such as credit score, income, and debt level.
Example
If you have a credit card with a $5,000 credit limit, you will not be able to charge more than $5,000 on the card. If you try to make a purchase that exceeds your credit limit, the transaction will be declined.
Related Terms
Adjustable Rate Mortgage (ARM)
A home loan with an interest rate that is fixed for a certain period, after which it may fluctuate with the market.
Line of Credit
A loan that allows a borrower to access funds up to a pre-approved credit limit, and is only charged interest on the borrowed funds.
APR
APR, or annual percentage rate, is a measure of the cost of borrowing money that includes the interest rate and other charges as a yearly rate.

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