Credit limit (Spending Limit)

A credit limit, also known as a spending limit, is the maximum amount of money that a person or business can borrow with a credit card or loan. It is a predetermined amount set by the lender or card issuer that cannot be exceeded. By setting a credit limit, creditors are able to reduce the risk of borrowers taking on debt they cannot repay. It also helps to keep borrower’s spending under control and to ensure that they are only using credit responsibly.