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Can a bank cut your credit limit or remove your overdraft without saying why?

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UKUpdated 6 October 2026 · Written by BuyMeWhiskey Editorial Team · How we check facts

For credit cards, the law says a lender must give reasons, objectively justified, when it suspends your spending and two months' notice before closing the account, but arranged overdrafts are excluded, so banks can often withdraw them under the account terms; either way you can ask for the reason and a human review.

Start by checking your credit reports for errors, then ask the bank in writing for its main reason and whether the decision was automated.

ICO: How to get your credit file and challenge errors

Are banks using AI to review your credit?

Many are using automated systems of some kind. In the Bank of England and FCA's 2024 survey of UK financial firms, 75% said they were already using artificial intelligence, and another 10% planned to within three years. Firms said 55% of their AI uses involve some automated decision-making. Most of those are designed with human oversight, and only 2% were described as fully autonomous. Lenders also routinely re-check existing customers' credit files. The ICO notes that lenders use credit reference agency data to decide whether to offer credit, and that nobody has a right to credit.

So an overdraft removal or limit cut may well come from an automated review of your account and credit file. What matters is what the law says the bank has to tell you, and what you can do about it.

Credit cards and other running credit: notice and reasons

For open-ended credit like credit cards, section 98A of the Consumer Credit Act 1974 sets two rules:

Closing the account: the lender must serve notice on you, and the termination can't take effect until at least two months after the notice is served.
Stopping or suspending your right to spend on it: the lender must notify you before it happens, or immediately afterwards if that isn't practicable. The notice must give reasons, and those reasons must be "objectively justified". The Act gives examples such as fraud or unauthorised use, or a significantly increased risk that you won't be able to repay.

The lender can withhold reasons where giving them would prejudice crime prevention or detection, or is otherwise prohibited by law.

Overdrafts are treated differently

Section 98A specifically excludes arranged overdrafts, along with unarranged overdrafts and mortgages. So the statutory notice-and-reasons rule above doesn't apply when a bank removes or reduces an overdraft. Instead, what the bank must do depends mainly on your account terms. That's why customers often get a letter listing possible reasons rather than their actual one. If you think the bank acted unfairly, for example by giving no warning or ignoring your circumstances, you can still complain.

Your rights if a computer made the decision

Under UK data protection law, as rewritten by the Data (Use and Access) Act 2025, a "significant decision" is one with a legal or similarly significant effect on you. Where such a decision is made solely by automated processing, with no meaningful human involvement, the organisation must have safeguards that let you:

get information about the decision
make representations about it
obtain human intervention
contest the decision

Whether a particular overdraft or limit decision counts depends on how it was made. But you can always ask the bank directly whether it was automated, and ask for a person to review it. The ICO says that if you think you've been refused credit unfairly, you can ask the lender to explain the main reason and review its decision.

What to do next

Check your credit files with the credit reference agencies. MoneyHelper lists four that produce free statutory reports: Experian, Equifax, TransUnion and Crediva. Look for errors, unknown searches or a financial link to someone else. If you're refused new credit because of credit reference agency information, section 157 requires the lender to tell you and name the agency.
Ask the bank in writing for its main reason, whether the decision was automated, and for a human review.
Complain formally if you're unhappy. For most complaints the bank has up to 8 weeks to send a final response. You then have 6 months from that response to take it to the Financial Ombudsman Service, which is free.
Don't rush into new applications. MoneyHelper warns that several hard searches in a short time can hurt your chances, so use soft-search eligibility checkers first.

Worked example

How the rules play out for one customer. Jan has an arranged £1,600 overdraft and a credit card, and rarely uses either. On 1 March both are reviewed.

The overdraft is withdrawn with a letter listing general reasons. Section 98A doesn't apply to overdrafts, so no statutory two-month notice or specific reason is required by that section. Jan's rights depend on the account terms and on whether the bank treated her fairly.
The card company decides to close the card. Because a card is open-end credit, the notice must be served first, and closure can't take effect until at least two months later. If notice is served on 1 March, the earliest closure date is just after 1 May.
If instead it suspends spending on the card, it must tell Jan before it happens or straight after, with an objectively justified reason.
Jan complains on 10 March. The bank has up to 8 weeks, until about 5 May, for its final response. Jan then has 6 months from that response to go to the Financial Ombudsman. Meanwhile, she asks whether the decision was automated and requests a human review.

Jan's credit file is clean, so she asks the bank to reconsider with up-to-date income evidence. That's the sort of information an automated review may not have had.

Are banks using AI to decide credit limits and overdrafts?#

Many firms use automated systems. In the Bank of England and FCA's 2024 survey, 75% of UK financial firms said they already use AI, and 55% of uses involve some automated decision-making. Most are designed with human oversight. You can ask your bank whether a decision about you was automated and request a human review.

Can my bank remove my overdraft without warning?#

Arranged overdrafts are excluded from the Consumer Credit Act's notice-and-reasons rule for running credit. So whether you get warning depends mainly on your account terms. If you think the bank acted unfairly, complain, and if you're unhappy with the outcome, you can take it to the Financial Ombudsman.

Does a credit card company have to tell me why it cut or froze my card?#

If it stops or suspends your right to use the card, the law says it must notify you, before or immediately after, with reasons that are objectively justified. Examples include suspected fraud or a significantly higher risk you won't repay. It can withhold reasons only in limited cases, such as where giving them would prejudice crime prevention.

Can I ask for a human to review an automated credit decision?#

Yes. For significant decisions made solely by automated processing, UK GDPR requires safeguards that let you get information, make representations, obtain human intervention and contest the decision. Even where that doesn't strictly apply, the ICO says you can ask a lender to explain the main reason and review its decision.

Will losing my overdraft or a lower credit limit affect my credit score?#

Your credit report lists your accounts, including current accounts with overdrafts, and what you owe, so changes can show up there. Check your reports from Experian, Equifax, TransUnion and Crediva. Fix any errors through the agency, which marks a disputed entry while it investigates.

How do I complain if my bank cut my credit for no reason?#

Complain to the bank first. For most complaints it has up to 8 weeks to send a final response. If you're unhappy, or it runs out of time, you can go to the free Financial Ombudsman Service within 6 months of the final response.

How much notice does a card company have to give before closing my account?#

At least two months. Under section 98A of the Consumer Credit Act, a lender ending an open-end agreement like a credit card must serve notice, and closure can't take effect until two months have passed. Separately, it can suspend spending sooner if it gives an objectively justified reason.

Keep reading

Sources

Figures checked against these sources on 6 October 2026. If a rule changes, we update the page and its date.

General information, not personal financial advice. Rules depend on your circumstances; check the official source or speak to a regulated adviser before acting.