True or false, A credit limit is the maximum amount of purchases you are allowed to make on a consumer credit card.
Understand the Problem
The question asks whether a statement about a credit limit, specifically that it is the maximum amount of purchases allowed on a consumer credit card, is true or false.
Answer
True, a credit limit is the maximum amount of purchases allowed on a credit card.
True, a credit limit is the maximum amount of purchases you are allowed to make on a consumer credit card.
Answer for screen readers
True, a credit limit is the maximum amount of purchases you are allowed to make on a consumer credit card.
More Information
A credit limit represents the ceiling on the amount a lender will let you charge to your credit card. This doesn't mean you should always spend up to the limit, as it can impact your credit utilization ratio and, in turn, your credit score.
Tips
A common mistake is confusing the credit limit with available credit; the available credit is what's left after your transactions.
Sources
- Understanding Your Credit Limit - Bank of America - bettermoneyhabits.bankofamerica.com
- What Is a Credit Limit & How Is It Determined? - Capital One - capitalone.com
- What Is a Credit Limit? - Experian - experian.com
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