Your bank may be quietly pushing you deeper into debt and millions of credit card users have no idea how or why it’s happening

According to this research, banks initiate four in five credit limit increases, and they’re increasingly using AI to target the most vulnerable customers.

As study author Dr. Agnes Kovacs told Newsweek, banks are increasingly turning to “machine learning and artificial intelligence algorithms to identify the most profitable customers to whom to give limit increases.” With this data, Kovacs argued, banks now “systematically extend additional credit to revolving borrowers,” who generate additional revenue through higher interest payments (2).

While these credit increases may feel like a perk at first, the data increasingly shows they are a major contributor to America’s credit card debt crisis.

Credit limit increases keep more cardholders in debt

American credit card debt already hit a record $1.23 trillion in the third quarter of 2025 (3).

Recent Bankrate data shows 46% of cardholders carry debt, and more than one-quarter of respondents feel there’s no way out (4).

While features of today’s so-called “K-shaped economy,” including inflation, play a role, persistent credit limit increases are directly shaping spending behavior (5).

Kovacs notes that borrowing activity tends to rise sharply in the first few months after a limit increase and continues to climb for up to six months. On average, these increases trigger a 30% rise in revolving balances.

Study authors also link roughly one-third of unpaid credit card balances to credit limit increases. The lower the credit score, the higher this connection appears to be. Rising living costs combined with AI-driven targeting help explain why these increases are having such a devastating impact on overall debt levels.

A higher credit limit doesn’t just offer flexibility. It can also fuel lifestyle creep, where higher spending slowly becomes the norm. Once that happens, high interest rates and revolving balances can trap borrowers in a cycle of minimum payments, rising debt and shrinking savings.

For consumers already under financial pressure, the pattern can feel like “debt steering.” Banks are using algorithms to push customers toward deeper borrowing that generates long-term interest revenue.

To address the issue, the King’s College researchers point to regulatory frameworks already in place in Canada and the UK. In both countries, there face clear restrictions on imposing credit limit increases without customer consent.

If the US adopted similar measures, researchers estimate consumer welfare could rise by about 1% while total revolving credit would decline.

How to stop credit increases from creeping in

Because the U.S. currently lacks policies limiting credit increases, consumers need to be proactive.

Most card issuers allow customers the option to disable automatic credit limit increases, but the option is often buried in account settings. If you cannot find it, call customer service and ask to have it turned off.