63% of Cardholders Don’t Understand Credit Limit Decisions

Credit card issuers have spent decades refining the science of credit scoring. But the latest research from PYMNTS Intelligence and Elan Credit Card suggests that the real risk to issuers may lie not in lending decisions themselves — but in how those decisions are explained.

The October 2025 report, “Credit Limits: Understanding Requests, Denials and the Consumer Experience,” finds that while most cardholders view the credit limit process as simple, many find it bafflingly opaque.

Nearly two-thirds of consumers say they have little or no understanding of how issuers decide whether to approve a credit limit increase. And one-third say at least one decision in the past three years felt unfair, a sentiment that spikes to nearly 60% among subprime borrowers.

That sense of confusion is doing more than bruising feelings. It’s quietly reshaping spending habits, card loyalty and consumers’ willingness to stay with an issuer.

The study of 2,199 cardholders reveals a credit landscape defined by automation and inequality. Roughly 4 in 10 cardholders received a credit limit increase in the past year, but 56% of those boosts happened automatically, without a request. When consumers took the initiative to ask for more credit, 67% were denied. Younger borrowers and those with lower credit scores were especially likely to be turned down.

• 63% of cardholders say they do not clearly understand how issuers decide credit limit changes.
• 35% of consumers denied a credit limit increase felt more negative toward their issuer — yet another 30% reported more positive feelings when issuers communicated clearly about the denial.
• 31% of denied cardholders reduced usage of that card, and 19% stopped using it altogether, underscoring the revenue risks of poor communication.

The underplayed story isn’t that denials are high. It’s that the experience of being denied is becoming a test of brand trust. Consumers with strong credit histories, including “super-prime” borrowers, are not immune to the perception that the process is arbitrary.

And those who feel treated unfairly often respond in ways that cost issuers business.

Nearly 1 in 5 denied customers applied for a new credit card from another issuer, and a similar share sought other forms of financing.

Among those rejected for higher limits, almost three-quarters turned to installment plans, suggesting that transparency failures may be fueling the migration toward buy now, pay later (BNPL) and other alternative credit models.

The irony, as the report makes clear, is that the fix isn’t complicated. Eight in 10 consumers who requested a credit limit increase said the process itself was easy. The issue lies in what happens after the request: opaque decision-making and inconsistent communication. Issuers that explain their reasoning, and provide clear guidance on what consumers can do to qualify next time, are turning potential friction into loyalty.

For a generation of cardholders who treat credit limits as part of their broader financial planning — including 71% who say those limits play a major role in budgeting — clarity is more than a courtesy. It’s a competitive differentiator.

In an era of instant payments and personalized offers, the next big innovation in credit may not be in data analytics or risk modeling. It may simply be in telling consumers, clearly and quickly, why the answer was yes … or no.

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