Which credit cards should i close?

creditcarddebt

Hi, I have recently cleared all my credit card debt and am looking to close down some of my cards, so do you have any advice on which cards to close and which ones to keep? Should i keep just 1 card?

I have the following:

Capital One - Limit £6,000
Halifax - Limit £3,400
RBS - Limit £3,910
Lloyds - i bank with Lloyds - Limit £2,500
MBNA - Limit £3,700

All of them have pretty high interest rates, so there is not one that sticks out as being the better one to keep purely on the interest rates alone.

Which ever card i keep i want to reduce my credit limit down to something like 1,500.

I only want to keep a card for use if an emergency arises.

Thanks

Moggles_2

All of them have pretty high interest rates, so there is not one that sticks out as being the better one to keep purely on the interest rates alone.

All standard rates will be variable (which means they can be changed up or down at any time), so this is rarely a reliable way to select a credit card in any case.

I would close the LloydsTSB card as it's not a good idea to use your bank as your sole credit card provider.

After that, it's a matter of personal choice. For instance, I'm not impressed with CapOne's overseas call centre, whereas MBNA and RBS provide pretty good telephone services, so I'd close the C1 card.

Should i keep just one card?

Everyone should have at least one back-up card, IMO. No credit card is 100% reliable and sadly there's the ever-present possibility of fraud, which means your card could be blocked temporarily through no fault of your own or the provider. What's more, if your lender varies your Ts & Cs or cuts your limit without warning, you have an alternative to hand. From a credit rating point of view, it makes sense too

davies0121

The question I have to ask is : If you are keeping one for emergencies, are we talking short term emergencies that you'll pay off next month or longer term?

If you are keeping one for an emergency and not for normal use, the benefits of each card isn't a major issue. If you have a good credit rating why not clear out the whole lot and get a new credit card with 0% for 12+ months (just got the new Tesco one yesterday) then if you need to use it, you can take a little longer to pay of it (if a real emergency happens).

Moggles_2

Which ever card i keep, i want to reduce my credit limit down to something like £1,500.

Sorry, you can't have that wish - not unless you're prepared to muck up your credit history. I would only resort to tinkering with credit limits if you really cannot trust yourself not to spend money you can't afford to pay back.

If you want to reduce your available credit, it's far better to pay off the balance and cancel a card completely, as Martin advises. Cards that are closed down and marked "settled" stay on credit files for six years and indicate that you can handle decent-sized credit limits well

creditcarddebt

My credit rating at the moment is not as good as it could be, so i think getting a new card would not be an option. Having no debt left on credit cards will now hopefully improve my rating over the next 6-12 months.

I am thinking that i would only need to use the card if something expensive comes up that i really cant afford, eg huge car repairs etc, and so this would probably be paid off over a longer term. Ideally i would like to never have to use credit cards at all! But sometimes i guess it cant be helped.

lisyloo

Ideally i would like to never have to use credit cards at all! But sometimes i guess it cant be helped.

Well actually yes it can.
I'm not judging you but challenging your ideas here.

If you KNOW certain events can possibly occur then why not plan an budget for them?
This can include car repairs, house repairs, or possibly death, sickness, accident and redundancy.

I don't know your situation but if you have any spare disposable income, then a good start would be to put some money away into an emergency fund.

I see two "levels" of emergency.
There is the car/house repairs.
But you should also consider the possibly longer term effects of accident, redundancy death, sickness (possibly long term or even permanent).

You should both budget and plan for the first kind and consider insurance and/or savings for the second kind.

But to challenge your comment, YES you can anticipate and plan for things if you even a little spare cash each month.
Obviously if you have no spare cash and can only afford to eat then it's not an option, but the vast majority have choices. They can spend to the entire extent of their income, or they can live WITHIN their means and have a little contingency for a rainy day.

Another downside to expecting to use credit for emergencies, is that it might not always be there (especially if you have no employment status).
Many have found out during this credit crunch that their credit has just evaporated. The same can happen if you lose your income.

Moggles_2

'Sounds as though you've had a bad experience with CCs. That's a pity because, used sensibly, they have many advantages.

There's risk attached to everything but, in general, credit cards are the safest way to purchase goods/services. (If you carry cash, it could be nicked. If you use cheques, they could get altered - assuming you can find a retailer that still accepts them - and if the firm goes bust, you've lost your money.)

With today's online facilities, it's never been easier to check the transactions posted to your account and keep an eye on your spending. Makes sense from a credit history point of view too. That said, you don't have to spend anything on your credit cards. Provided that you kept within your Ts & Cs, you'd still build a nice, healthy string of zeros on credit files