Credit Limit Confusion Sends Consumer Spending Packing

Credit limits have traditionally been treated as a mechanical feature of card programs: a numeric ceiling determined by algorithms, credit scores and internal risk thresholds.

But new findings from the report, “Credit Limits: Understanding Requests, Denials and the Consumer Experience,” a PYMNTS Intelligence and Elan Credit Card collaboration, suggests that for consumers, credit limits function as something far more consequential.

The data shows that card holders view their credit limits as a signal of trust, stability and belonging in the financial system. When issuers fail to recognize this distinction, they risk pushing cardholders toward alternative products, eroding loyalty and leaving value on the table.

Per the report, 84% of cardholders who requested or accepted an increase said the process was easy. Yet only 37% say they clearly understand how issuers decide whether to approve or deny increases. Nearly two-thirds describe the decision process as only somewhat clear or not clear at all.

This gap fuels frustration. One-third of consumers who have experienced a credit limit adjustment in the past three years say at least one decision felt unfair. Among subprime borrowers, that figure rises to nearly 60%. These perceptions are not just emotional — they influence behavior.

Cardholders denied limit increases frequently reduce card usage, apply for cards from competing issuers or turn to installment plans and other alternative forms of credit. In trying to manage risk, issuers may be inadvertently accelerating fragmentation by sending customers elsewhere to meet needs that their primary card no longer fulfills.

After a denial, nearly one-third of cardholders reduced how often they used the card, and almost 1 in 5 stopped using it altogether.

Issuers tend to optimize credit limits for loss prevention, but consumers interpret them as judgments about reliability and worthiness. Recognizing credit limit decisions as moments of relational signaling akin to pricing, rewards or service recovery can help reframe how issuers design communications and follow-ups around approvals and denials.

For issuers, the choice is not between generosity and discipline. It is between intentional design and accidental outcomes. Credit limits may be governed by algorithms, but they are experienced emotionally, socially and strategically by consumers navigating a complex financial world.

Consumers under financial pressure are more likely to request credit limit increases, and also more likely to be denied. Subprime borrowers are more than three times as likely as super-prime borrowers to ask for an increase, yet 94% of their requests are denied. 

The report data shows that confusion, not denial, is the primary driver of dissatisfaction. Issuers do not need to disclose proprietary algorithms, but they can provide clearer explanations, timelines and guidance on what behaviors would improve eligibility. Fast decisions paired with understandable reasoning can preserve trust even when outcomes are negative.

Read the report: Credit Limits: Understanding Requests, Denials and the Consumer Experience

Why does this all matter? Left unaddressed, the structural mismatch in credit limit increases is likely to continue to push consumers toward a patchwork of alternative products such as BNPL plans, secondary cards and competing issuers; fragmenting relationships that banks and credit unions have spent decades building. The PYMNTS data makes clear that credit demand does not disappear when limits stagnate; it simply migrates.

Among cardholders who received a limit increase, 64% reported a more positive impression of their issuer. Among those denied, 35% reported a more negative view, with especially strong reactions among lower- and middle-income consumers and younger cohorts.

Rather than viewing this shift as leakage, issuers can proactively position installment products as structured alternatives when revolving credit is unavailable — keeping spending and engagement within their ecosystem.

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