ECONOMICS
CREDIT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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$2, 000.
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Credit limit
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Speed limit
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how much you can overspend
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Detailed explanation-1: -Credit limit is the maximum amount you can spend using your credit card at any given time. Credit card limits are imposed to make sure that you can repay the money you borrow within a certain period of time without falling into debt problems.
Detailed explanation-2: -What is a credit card limit? A credit card limit is the total amount of money you can charge to a credit card. If your credit card has a limit of $5, 000, for example, it means you can carry a balance of up to $5, 000 on your credit card.
Detailed explanation-3: -A credit utilisation ratio of more than 35% can reduce your credit score. So, if you use up your entire credit limit, your credit utilisation ratio would be 100%, which can lower your credit score.
Detailed explanation-4: -For starters, credit card issuers are only allowed to charge over-limit fees to cardholders who have opted in to over-limit protection plans. If you did not sign up for over-limit protection, you won’t be charged any over-limit fees-but you also won’t be able to spend over your credit card limit.