What is a credit limit on a credit card?

The credit limit is the amount that can be spent using the credit card.

This limit is based on the income of the individual and their ability to repay the amount.

This is the maximum amount that a person can have outstanding on the card.

For example if the credit limit on a card is Rs 1 lakh and the person has spent Rs 60,000 already then the additional amount spent cannot be more than Rs 40,000.

The moment some amount is repaid on the credit card the credit limit gets freed up again which can be used for further spends.

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