Should I close the only card I can get?

Xenu_2

Hi All,

I wont bore you with the detalis, but suffice it to say that I dont have excellent credit history due to an ex partner not closing a joint account and letting it go into arrears for years as well as some defaults when I was a student.

All that is now well behind me and I have been working for the last 3 years and have managed to save up about £5k in savings. Not a lot, but I also cleared off about 6k in debts and bought a load of furniture/stuff for our rented flat.

I was with Barclays for bank account and credit card, however I got really sick of being messed around and lots of big charges and a pathetic £400 credit limit on my Barclaycard (I earn £50k a year) so I decided to move everything to abbey.

So I got an Abbey (or Santander) credit card the Abbey Zero one. All seems good, I transfer a balance from another card and used it two or three times. The card is now maxed out and the interest-free balance transfer period has ended and am now getting charged anywhere from £100-170 a month.

Anyway, to get to the point, I then tried to open another card so I could balance transfer the abbey card but I got turned down. A few months before that, I got turned down to buy a computer on finance that I could If I saved buy in a month so now my question is:

Do I get rid of the only credit card I seem to be able to get. As I think its very unlikely that I get another credit card and Abbey have given me a considerable limit which I dont think I could get again from elsewhere. I was thinking of using my savings to pay off the card.... leaving me with very little savings but I suppose I could recoup this savings over a year and hopefully should be able to do it quicker as I would have more free every month.....

So do I pay off the card and close the account / Pay off leave open or just continue to pay off every month and maybe increase my monthly payment a bit?


Damn I wish my credit rating didnt suck, it's going to make getting a house difficult.


Thanks all...
:j

frivolous_fay

As far as I can see, your savings are worthless if you are incurring more interest on the card than the savings are gaining.
What rate are your savings getting? Are they in an ISA?

williham

pay off the credit card, there's no point in having savings when you're getting charged so much interest.
Keep the card open though.. you could reduce the credit limit a bit but it's worth having one if others have turned you down.

Xenu_2

Thanks for the replies, I think I will take your advice and pay off the card but keep it open. I'm sure it will look beneficial if I keep the balance to nothing or pay it off in full every month since Im after a mortgage.

I was thinking to keep the savings for deposit, but you're right whats the point in having savings if the interest is more than outweighed by the credit card interest.

Cheers

CLAPTON

clear the card

use it every month for things you buy anyway (e.g. petrol)
pay in full each month... set up a DD for the full amount

you will probably need at least 20k for a deposit for a house so then start saving say 25% of your salary.

Xenu_2

paid it off... feels good to be out of debt

bank manager told me I need 50k deposit, I plan to put away about £1.5k a month while the missus puts away about 500 quid. Hopefully we can do it in 2-3 years
hadnt thought about using it to pay for my stuff and paying it off in full but it might actually help my credit rating if I show regular payments, although i was always paying minimum every month and didnt miss any payments.

cheers!!!