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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
Overdraft Line of Credit
A loan tied to a checking account that can be used to cover transactions that exceed the available balance in the account.
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.
Lender
A financial institution or individual that provides money to a borrower with the expectation of being repaid, often with interest.

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