What term describes the maximum dollar amount that can be borrowed on a credit account?

What term describes the maximum dollar amount that can be borrowed on a credit account?

• A. Interest Rate
• B. Balance
• C. Credit Limit
• D. Borrowing Cap

Answer: (C)

This describes how much you’re allowed to borrow on a credit account. The word for that maximum amount is credit limit. Lenders set a credit limit to control risk and keep borrowing within a manageable range, so you can use your card or line of credit up to that ceiling without exceeding what you can repay. Interest rate is about the cost of borrowing, expressed as a percentage, not how much you can borrow. Balance is how much you currently owe, not the maximum you’re allowed to borrow. Borrowing cap is sometimes used informally, but the standard term used by lenders is credit limit.

This describes how much you’re allowed to borrow on a credit account. The word for that maximum amount is credit limit. Lenders set a credit limit to control risk and keep borrowing within a manageable range, so you can use your card or line of credit up to that ceiling without exceeding what you can repay.

Interest rate is about the cost of borrowing, expressed as a percentage, not how much you can borrow. Balance is how much you currently owe, not the maximum you’re allowed to borrow. Borrowing cap is sometimes used informally, but the standard term used by lenders is credit limit.