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credit limit

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Definition: A credit card credit limit is the maximum amount that can be borrowed on a credit card without penalty. Exceeding your credit limit results in an over the limit fee. Your credit card issuer might also raise your interest rate to the default rate if you go over your credit limit.

Exceeding your credit limit and even getting close to it impacts your credit score. Your credit utilization measures the amount of your credit limit that's being used and counts 30% of your credit score. The higher your credit card balance, the lower your credit utilization and the more your credit score is hurt. It's best to keep your credit card balances within 10% to 30% of your credit limit.

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