I had a similar problem when applying for a Citi card - a rejection with the explanation:

"The credit privileges on your existing account(s) are currently restricted."

On calling, a Citi rep briefly dug around and found that the bank had closed an old card due to inactivity. She was able to get my new card approved, and to prevent future issues she called a customer service line to try to get this recoded - what a terrific rep!

After several minutes, the customer service rep realized it was a "silly" miscoding, but had to get her supervisor to get it changed. I agree with previous posters - it may be difficult to change but not impossible. Thanks to MDtR-Chicago for posting his experience and paving the way!