Answer: C. Maximum revolving credit. The credit limit is the maximum revolving credit assigned to a card account.
Who normally decides a cardholder’s approved limit?
A The card issuer
B The payment terminal
C A retail cashier
D The credit bureau
Answer: A. The card issuer. The issuer assesses an application and sets the limit under its lending policy.
Which information may an issuer consider when assessing a limit?
A Card colour preference
B Favourite retail shop
C Phone model only
D Financial profile and credit history
Answer: D. Financial profile and credit history. Issuers assess credit risk using relevant applicant information and their underwriting policies.
How does available credit relate to the total limit?
A It is the annual fee
B It is remaining usable credit
C Cash advance fee
D It is the reward balance
Answer: B. It is remaining usable credit. Available credit is the portion of the limit that remains usable after account activity and issuer controls.
What can reduce available credit before a purchase posts?
A A paper statement
B A pending authorization
C A rewards catalogue
D A card design update
Answer: B. A pending authorization. A pending authorization can temporarily reduce available credit until it is settled or released.
How can a cardholder estimate credit utilization?
A Limit divided by salary
B Fees divided by rewards
C Due date divided by cycle
D Balance divided by limit
Answer: D. Balance divided by limit. A simple utilization ratio compares the balance used with the credit limit.
Which limit may be lower than the overall card limit?
A Cash withdrawal sublimit
B Annual membership amount
C Reward redemption value
D Statement delivery period
Answer: A. Cash withdrawal sublimit. An issuer may set a separate cash withdrawal limit below the overall credit limit.
What does an over-limit transaction do?
A Uses only available credit
B Redeems reward points
C Exceeds the assigned limit
D Closes the account
Answer: C. Exceeds the assigned limit. An over-limit transaction would take usage beyond the assigned credit limit.
For an Indian credit card, what is required before over-limit use?
A Merchant’s verbal consent
B A credit bureau report
C An automatic issuer message
D Cardholder’s explicit consent
Answer: D. Cardholder’s explicit consent. RBI directions require prior explicit cardholder consent for an over-limit facility.
When may an issuer levy an over-limit charge under RBI directions?
A Whenever a statement prints
B After explicit over-limit consent
C After any card purchase
D When reward points expire
Answer: B. After explicit over-limit consent. RBI directions say an over-limit facility or charge requires the cardholder’s prior explicit consent.
Which items are excluded from limit usage calculation for over-limit charges under RBI directions?
A Retail purchases
B Cash withdrawals
C Interest and card fees
D Posted refunds
Answer: C. Interest and card fees. RBI directions exclude interest and other card charges or fees when computing limit usage for over-limit charges.
What should an issuer assess before setting a limit?
A The applicant’s repayment risk
B The merchant’s sales target
C A card’s printed artwork
D A customer’s reward choice
Answer: A. The applicant’s repayment risk. Issuers are expected to assess credit risk and relevant financial means when underwriting cards.
Why may several cards matter to a limit assessment?
A They add available credit
B They merge into one account
C They remove repayment duties
D They guarantee a higher limit
Answer: A. They add available credit. An issuer may consider limits from other entities when assessing a customer’s overall credit exposure.
What happens to available credit after a purchase is authorized?
A It always doubles
B It becomes reward points
C It is transferred to savings
D It may decrease temporarily
Answer: D. It may decrease temporarily. An authorization can reduce the amount currently available, even before final settlement.
After a payment posts, what can happen to available credit?
A It must remain unchanged
B It may increase
C It becomes a cash advance
D It is erased permanently
Answer: B. It may increase. Once a payment is processed, it may reduce the outstanding balance and restore available credit.
Why might a card payment not restore credit instantly?
A Limits reset only yearly
B A statement must be printed
C Processing can take time
D Rewards must first expire
Answer: C. Processing can take time. Payment posting and limit updates can take time depending on the payment channel and issuer.
What can happen when a purchase exceeds available credit?
A The balance becomes income
B The transaction may be declined
C The card changes networks
D The credit score resets
Answer: B. The transaction may be declined. A transaction can be declined if it exceeds available credit, though authorization decisions can depend on issuer controls.
Which figure is not the same as a card’s credit limit?
A Its cash withdrawal limit
B Its approved revolving limit
C Its maximum credit amount
D Its overall credit facility
Answer: A. Its cash withdrawal limit. A cash withdrawal sublimit can be lower than the overall credit limit.
How can a refund affect a card balance?
A It permanently closes the card
B It increases the purchase price
C It removes the credit limit
D May reduce the balance
Answer: D. May reduce the balance. After the merchant’s refund is credited, it can reduce the amount outstanding.
When can a cancelled purchase still affect available credit?
A Only after a year
B After the card expires
C While its authorization remains pending
D Only after a cash withdrawal
Answer: C. While its authorization remains pending. A pending authorization may continue to reserve credit until the merchant or issuer releases it.
What may happen when an issuer approves a limit increase?
A Available borrowing may rise
B Existing debt disappears
C Past payments are erased
D Interest rates must fall
Answer: A. Available borrowing may rise. A higher limit increases potential borrowing capacity but does not erase existing balances.
Before accepting a proposed limit increase, what should a cardholder review?
A Only the card’s colour
B The merchant’s refund policy
C Terms and repayment capacity
D Reward advertisements alone
Answer: C. Terms and repayment capacity. Reviewing terms and one’s ability to repay helps avoid using a larger limit unsustainably.
Why does a higher limit not equal higher income?
A It is a salary payment
B It is a tax refund
C It is a savings deposit
D It is borrowed credit access
Answer: D. It is borrowed credit access. A credit limit is access to borrowing, not earned income or money already deposited.
What does a secured card’s limit commonly depend on?
A The card’s colour
B Issuer terms and collateral
C The merchant’s opening hours
D The user’s phone storage
Answer: B. Issuer terms and collateral. Secured-card limits depend on the issuer’s product terms and pledged collateral.
How might an add-on card use the main account’s limit?
A It always creates new income
B It has no account relationship
C According to issuer arrangements
D It doubles every transaction
Answer: C. According to issuer arrangements. Add-on card spending is generally governed by the linked account’s limit and issuer terms.
Which change could make a previously affordable purchase exceed available credit?
A A shorter card number
B An older paper statement
C A different card design
D A new posted transaction
Answer: D. A new posted transaction. Other purchases, fees, or pending authorizations can reduce available credit before a new transaction.
What may an issuer show alongside the credit limit?
A A merchant’s inventory
B Available credit amount
C A cardholder’s salary slip
D The bureau’s secret formula
Answer: B. Available credit amount. Card apps and statements may display the total limit and remaining available credit.
Why check the limit before a large purchase?
A To avoid an authorization shortfall
B To guarantee a discount
C To earn extra credit history
D To cancel the billing cycle
Answer: A. To avoid an authorization shortfall. Checking available credit can help anticipate whether the transaction may fit within issuer controls.
What may restore available credit after an authorization is reversed?
A Printing a new statement
B Changing the card PIN
C Opening a savings account
D Release of the reserved amount
Answer: D. Release of the reserved amount. When a pending authorization is reversed or released, the reserved amount may return to available credit.
If a card is near its limit, which figure should be checked first?
A Current available credit
B Total reward points
C Annual membership date
D Card manufacture year
Answer: A. Current available credit. Available credit indicates the remaining amount usable at that time.
Which balance is useful for estimating current utilization?
A Unused reward points
B The annual membership fee
C Outstanding card balance
D A merchant’s cash balance
Answer: C. Outstanding card balance. Utilization estimates compare credit used with the relevant limit.
Can a limit increase remove a cardholder’s obligation to repay?
A Yes, all debt disappears
B No, balances remain payable
C Yes, purchases become rewards
D No, the card stops working
Answer: B. No, balances remain payable. A higher limit changes borrowing capacity, not the obligation to repay existing balances.
What does a zero available-credit figure usually indicate?
A The account has no statement
B Limit fully used or held
C All card fees are refunded
D The card has unlimited credit
Answer: B. Limit fully used or held. A zero figure can mean the limit is fully utilized or temporarily reserved by transactions.
Why might a temporary authorization reduce available credit?
A It raises the account limit
B It pays the bill early
C It converts purchases into cash
D It reserves room for settlement
Answer: D. It reserves room for settlement. An authorization reserves credit while a transaction is awaiting completion.
What can a cardholder do if the stated limit looks incorrect?
A Share credentials on social media
B Ignore account records
C Contact issuer through official channels
D Ask the merchant
Answer: C. Contact issuer through official channels. The issuer can explain the account limit and investigate a possible display or account error.
Which action changes the credit limit itself?
A An issuer-approved limit adjustment
B A merchant refund alone
C Redeeming reward points
D Printing a monthly statement
Answer: A. An issuer-approved limit adjustment. The issuer controls limit adjustments; transaction activity can affect available credit without changing the total limit.
How can multiple pending purchases affect a card?
A They create separate incomes
B They always raise its limit
C They erase posted balances
D They can reserve available credit
Answer: D. They can reserve available credit. Several authorizations may collectively reduce the remaining credit available.
What should a cardholder do if a limit increase is unwanted?
A Share card details publicly
B Decline or contact the issuer
C Ignore all notices
D Create a second account
Answer: B. Decline or contact the issuer. The cardholder can communicate with the issuer about an unwanted change or offer.
Which statement best describes a credit-limit decrease?
A It reduces borrowing capacity
B It cancels every transaction
C It refunds past interest
D It deletes the account history
Answer: A. It reduces borrowing capacity. A lower limit reduces potential borrowing capacity, while existing balances remain payable.
What can raise the utilization ratio if the balance stays unchanged?
A A larger payment
B A credited refund
C A lower credit limit
D A higher available amount
Answer: C. A lower credit limit. With the same balance, a lower limit makes the used portion a larger share.
How can a cardholder lower utilization in a simple calculation?
A Raise the annual fee
B Delay all payments
C Increase pending purchases
D Reduce the balance used
Answer: D. Reduce the balance used. A lower outstanding balance relative to the limit results in lower utilization.
Why should utilization guidance avoid promising a fixed score gain?
A Every score uses one formula
B Limits never affect scores
C Scoring models can differ
D All bureaus share one scale
Answer: C. Scoring models can differ. Credit-score methods differ, so a utilization change does not guarantee a specific score result.
When may a credit limit be unavailable for a transaction despite a large total limit?
A Rewards are unredeemed
B A separate transaction control applies
C The statement is digital
D The card has a chip
Answer: B. A separate transaction control applies. Cash limits, merchant controls, security rules, and other issuer restrictions can affect a transaction.
What is one purpose of a transaction control in a card app?
A Manage permitted transaction types
B Rewrite the credit report
C Change the billing cycle automatically
D Increase income records
Answer: A. Manage permitted transaction types. Issuer controls can let cardholders manage features such as transaction channels or over-limit use.
How does an installment conversion affect the original card account?
A It always frees all credit
B It erases the purchase record
C Terms show principal and charges
D It guarantees zero interest
Answer: C. Terms show principal and charges. An EMI conversion can affect the outstanding balance and should disclose principal, interest, and applicable terms.
What is the key difference between limit and balance?
A Cash fee versus reward value
B Maximum credit versus amount owed
C Statement date versus due date
D Card number versus PIN
Answer: B. Maximum credit versus amount owed. The limit is the maximum credit assigned; the balance is the amount currently owed.
Which action is not a reliable way to increase available credit?
A Receiving a posted refund
B Settling a balance
C Waiting for an authorization release
D Making an unposted payment
Answer: D. Making an unposted payment. An unposted payment may not yet be reflected in the issuer’s available-credit figure.
What is a prudent response to a declined transaction near the limit?
A Check account and available credit
B Retry repeatedly without checking
C Share the PIN with staff
D Ignore issuer alerts
Answer: A. Check account and available credit. Review the app or contact the issuer to understand the decline before taking further steps.
What does a credit limit primarily control?
A The card’s annual fee
B A merchant’s refund period
C Maximum permitted revolving exposure
D The number of reward categories
Answer: C. Maximum permitted revolving exposure. The limit caps the revolving credit exposure available on the account, subject to issuer controls.
How may an issuer communicate a limit adjustment?
A A merchant’s public menu
B Issuer account notices
C An unrelated rewards advert
D An unverified phone call
Answer: B. Issuer account notices. Issuers communicate account changes through their authorized channels; cardholders should verify notices through official issuer channels.