Which term describes the maximum amount you can borrow from a revolving credit account at one time?

• A. Unpaid account balance
• B. Credit limit
• C. Installment credit
• D. Revolving credit

Answer: (B)

The maximum amount you can borrow at one time on a revolving credit account is called the credit limit. This is the cap set by the lender for that account. As you use the account, your current balance grows; your available credit equals the credit limit minus that balance, so you can borrow again up to the limit. This differs from the unpaid account balance, which is how much you still owe, and from the concept of revolving credit itself, which describes the type of account that lets you borrow, repay, and borrow again up to the limit. Installment credit, by contrast, is a fixed loan amount paid back in set payments, not a revolving line of credit.