A tightening credit backdrop is changing how Americans think about credit cards, from whether to apply for a new account to how often to ask for a higher line. PYMNTS Intelligence data and the most recent New York Federal Reserve Bank’s Credit Access Survey together show a card market where consumers still have room on paper, yet increasingly fear that a new application will be turned down.
Perception Gap
PYMNTS Intelligence finds 42% of consumers doubt they would be approved for a new credit card — even though the actual denial rate for general-purpose card applications among those without active cards is 15%.
This gap is large enough to keep many would-be applicants on the sidelines. Among consumers who do not currently have an active credit card, 43% report they have never applied at all, suggesting self-screening behavior plays a major role.
This psychological barrier cuts across income bands. Even households earning more than $100,000 a year are not uniformly confident they would be approved, underscoring that anxiety about credit access is not limited to subprime or low-income borrowers.
Fed Survey: Rejections Increase Overall, Mixed for Cards
The New York Fed’s October Credit Access Survey, released Monday (Nov. 17), shows total rejection rates across all credit products rising to 24.8%, a series high up from 23.1% in June and 21.5% in February. Within that tightening environment, card-specific dynamics look different: card application rates ticked up from 25.5% to 26.6%, while the rejection rate for card applications edged down from 22.1% to 21.1% among those who applied.
At the same time, requests for credit card limit increases grew for the second straight survey period, to 17.8%, matching a series high first set in October 2023. Overall application activity across all credit types stood at 41.1%, below the levels seen two and three years ago, indicating a more selective demand environment.
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The Fed also finds that a growing share of applications is coming from consumers with credit scores below 680 (rising from 44% to 51.7%), whose rejection rate jumped to 63%. That shift helps explain why overall rejection rates are climbing even as card applicants’ odds remain relatively stable.
Looking for Higher Limits
PYMNTS Intelligence shows that building or improving a credit score is the top reason (26.2%) consumers without an active credit card give for wanting one. That same desire to optimize scores now animates how cardholders think about credit limits. Of those who requested a higher limit, 52% did so to gain financial flexibility, 39% did so to improve their credit scores and 29% were prepping for a large purchase.
Consumers appear to view expanding existing card capacity as a more attainable strategy than opening new accounts in a tightening environment.
BNPL and Credit Access
Even as many consumers hesitate to apply for new cards, they are experimenting with alternative forms of credit access. PYMNTS Intelligence finds buy now, pay later (BNPL) is popular, particularly among consumers facing financial difficulties. According to the report, consumers who frequently encounter cash flow problems are 3.5 times more likely to use BNPL.
Together, the Fed survey and PYMNTS Intelligence data describe a card landscape where the hardest credit-access problem is not always a lender’s appetite for risk, but the consumer’s expectation about their own chances. Actual denial rates for cards remain well below what many people expect, yet those expectations are powerful enough to affect application volume, limit requests and migration to BNPL or alternative products.
For issuers, that creates both risk and opportunity. Clarifying approval odds, making criteria more transparent, and positioning flexible credit lines as part of a broader financial-management strategy (not just as a last-resort) may help close the gap between perceived and actual credit access.
