Closing Credit Cards with outstanding balances?

creditcardnewbie

Hello to you all,

A friend of mine has a lot of credit card debt at the moment with 4 or 5 companies (£10k approx) which include Barclaycard and Bank of Ireland (not sure of the others) and was asking me is it possible to close the accounts whilst there is still a balance outstanding?

He intends to pay off the balance each month but he would like the cards to be blocked so he is unable to spend on them as he clears the balances (fears he will be tempted to spend).

He does not intend to use the cards once the balances have been cleared. He is concerned though that this may look bad on his credit file?

I’m not 100% on this so thought I would ask here – has anyone had experience of this or done this and does it affect your credit rating in any way?

Many thanks for any advice you can offer,

creditcardnewbie :beer:

ILW

Cut them up?

Robert_Sterling_3

Shred them but keep statements.

creditcardnewbie

Hello ILW and Robert,

Many thanks for your prompt responses on this - it is very much appreciated.

I have advised him before to cut up the cards and shred them if he isn't going to use them again once they are closed. He said he has now done this but he still gets tempted once his statement comes in each month as his statement has his credit card number on it. This enables him to shop online - he seems to remember all his security codes to allow him to do this.

He feels that the only way out is to ask the company to block him from using the card. He will be seeking a mortgage once the cards have been paid off but is concerned that this may damage his rating?

Many thanks for your responses once again - any further thoughts also welcome.

creditcardnewbie :beer:

nickmack

creditcardnewbie wrote: »

He feels that the only way out is to ask the company to block him from using the card. He will be seeking a mortgage once the cards have been paid off but is concerned that this may damage his rating?

Many thanks for your responses once again - any further thoughts also welcome.

If his self-discipline is that poor, it sounds like he needs some help. You may want to suggest he visits the Debt Free Wannabe board for support.

He could ask the CC company to close the account and see what they say. They do this for customers who don't agree to interest rate increases, but obviously the balance needs to be repaid. Failing this, they may be able to reduce his credit limit each month in line with the decreasing balance, although this will not stop him from spending and exceeding the limit, it may act as a deterrent.

creditcardnewbie

nickmack wrote: »

If his self-discipline is that poor, it sounds like he needs some help. You may want to suggest he visits the Debt Free Wannabe board for support.

He could ask the CC company to close the account and see what they say. They do this for customers who don't agree to interest rate increases, but obviously the balance needs to be repaid. Failing this, they may be able to reduce his credit limit each month in line with the decreasing balance, although this will not stop him from spending and exceeding the limit, it may act as a deterrent.

Hello Nickmack,

Many thanks for your response. You are 100% - his self-control is very poor and it is something he is working hard on. The limit reduction is another good idea - I'll pass that on.

I have advised him to register on this site too because of the wide range of experience and people on offer to help him. He hasn't registered as of yet but says he will do.

He is still keen to put the block on the cards but isn't sure how it will be received when he rings the company ie. will they increase his rate as a result or if it will look bad on his credit rating.

Many thanks again Nickmack,

creditcardnewbie :beer:

nickmack

creditcardnewbie wrote: »

He is still keen to put the block on the cards but isn't sure how it will be received when he rings the company ie. will they increase his rate as a result or if it will look bad on his credit rating.

They have to provide the option to close the account and pay at the current rate if they increase the APR.

As long as he doesn't have late/missed payments, his credit rating should not be affected.

Moggles_2

The limit reduction is another good idea

I would think carefully before lowering the credit limits. If he accidently exceeds his limit, he's broken the terms of his agreement which has more serious consequences than going over his budget.

Moggles_2

He still gets tempted once his statement comes in each month, as his statement has his credit card number on it.

He'll need to keep some of the paperwork. He will need the account numbers, passwords etc. in order to cancel and close down the accounts, when the time comes.

Rikki

He cannot shop on-line just using the number from the credit card statement. He will need the three digit security number off the back of the card too.

ILW

creditcardnewbie wrote: »

Hello ILW and Robert,

I have advised him before to cut up the cards and shred them if he isn't going to use them again once they are closed. He said he has now done this but he still gets tempted once his statement comes in each month as his statement has his credit card number on it. This enables him to shop online - he seems to remember all his security codes to allow him to do this.

He feels that the only way out is to ask the company to block him from using the card. He will be seeking a mortgage once the cards have been paid off but is concerned that this may damage his rating?

Many thanks for your responses once again - any further thoughts also welcome.

creditcardnewbie :beer:

Could you speak to his carer?