Which of the following best describes a "commitment fee" as it relates to revolving credit?

A commitment fee is a financial charge that lenders impose on borrowers for the availability of a revolving line of credit. This fee serves as compensation for the lender, ensuring that the credit line remains accessible to the borrower even if they do not fully utilize it. Essentially, it is a cost incurred for maintaining the credit line's readiness for use.

In the context of revolving credit, this fee is particularly relevant because it aligns the lender's interests with the borrower's, allowing the borrower the flexibility to draw funds as needed without having to renegotiate terms or secure new financing each time they wish to access credit. As such, option B accurately encapsulates this definition, distinguishing the commitment fee from other types of fees that pertain to early repayment, exceeding a credit limit, or processing a loan application. Each of those alternative scenarios pertains to different aspects of credit management rather than the fee for merely reserving access to funds.