Cancel card or reduce credit limit?

[Does] reducing the credit limit has the same effect as formally cancelling the card. I have a LLoyds TSB mastercard with a zero balance and a £15,000 credit limit that I have kept solely for emergencies.

I'm assuming you read the whole article, particularly:

What are the benefits of cancelling a card?

There are two main benefits, both of which are about maintaining your ability to access the market’s best deals.

Improved Credit Score. When you cancel your cards, by definition you have less available credit. This is a boost to your credit score as it means potential over-indebtedness is less of a problem. For this reason alone cancelling your credit cards is worthwhile

Cancelling your £15,000 card will reduce your available credit by £15,000. Reducing the limit to (say) £2,000 will reduce your available credit by £13,000.

So in answer to your question: No - reducing the limit is not the same as formally cancelling. Unless of course you want the limit reduced to £0.

All this, of course, ignores the fact that in not cancelling, you have one more credit card than you would have had, had you cancelled.

Hi Pjayt,

Not answering your original question but just thought I'd say a word of warning - the barclays 0% for life offer (I think) was only valid if you spent £50 a month on the card. So therefore, you had £50 of purchases every month - £600 a year - attracting the purchases APR - which is not a small amount of money (£100ish per year). ONLY AFTER YOU CLEAR THE ORIGINAL BALANCE TRANSFER will your payments go off the purchases you've made, making the balance transfer rather expensive in the long run.

So you may want to consider this and check you're not being fleeced by them since you're trying to pay your debts off (which is hard enough as it is without being nadgered by CC interest too...!).

All the best,

Chris