Keep or cancel nil balance cards ?

discrunner

Hi there, i am in the process of finally paying off fully my credit cards with some inherited money. Once paid, am I better to close the cards fully or keep them with no balance outstanding? does it make a difference to my credit rating either way...
Thanks for any help in advance with this

Moggles_2

Welcome to MSE!

Once paid, am I better to close the cards fully or keep them with no balance outstanding? Does it make a difference to my credit rating either way?

That depends on how many credit cards you have at the mo and what percentage you intend to close down. Your available credit in relation to your annual income is also a factor.

The national average is five, so if you have five credit cards or fewer and none is maxed out, it's unlikely your credit rating would be harmed by keeping these cards, unless you have a lower than average annual income. That said, with each successful credit card application, your available credit will increase in relation to your income and there will come a point when you must consider closure.

pir

I'm in a similar situation. After years of tarting I've ended up with quite a few cards with nil balances. It's been great tarting but I haven't done it in a while. I now just use my M&S card to buy everything and pay it off.

I need to shut down a few cards. Any cards that are particularly worthwhile holding on to maybe because of good long term deals (if I ever need one) or because of offers etc?

Thanks

discrunner

Thanks for that Moggles, it looks as though i may be better off keeping them open for use. that said, i just had mail from one company informing me they have hiked my interest rate. Good timing indeed.

Moggles_2

pir wrote: »

I need to shut down a few cards. Any cards that are particularly worthwhile holding on to maybe because of good long term deals (if I ever need one) or because of offers?

Originally Posted by discrunner
It looks as though i may be better off keeping them open for use. That said, i just had mail from one company informing me they have hiked my interest rate. Good timing indeed.

Yes, I think you have to treat each credit card on its own merits. IME, some card companies (eg. Barclaycard, MBNA) have regular offers and MBNA will even waive BT fees sometimes, if you're prepared to negotiate over the phone. Others (eg. HBOS, HSBC) reserve their best deals for new applicants. Also, I would think twice about closing Egg or my last MBNA card (eg. MBNA itself, Virgin) as these allow you to route funds via your current account.

In general, unless a card has a particular benefit, then I would close the account. By cancelling a card you can re-apply to that provider as a 'new' customer and take advantage of any introductory deals on offer :cool:

Another good reason for phoning customer services to cancel an unused card is that occasionally you're offered an incentive to stay

Moggles_2

P.S. Some lenders will not consider applications from former card holders for various periods following closure. Others accept applicants straight away

In all cases, it's advisable to check your credit reports to make certain the account is actually closed down and marked "settled" before you re-apply