My credit card companies are telling me to keep my card in my draw?

copper01

Hi,

I have got rid of my Capital One card that was charging a 30.34% APR and also my Abbey credit card charging 24.71% APR.

The above have both told me to keep my credit card in my drawer as it will effect my credit rating if i close the accounts and will show on my credit record.
Is this info correct or are they having me on?

I have transferred some of my debt (£3600) to the barclaycard 6.9% for life and have set up direct debit at £100 per month.
The other debt i have is (£3635) with halifax who are charging me around 19.9% on cash and 15.5% on balance and at present i have a direct debit set up for the minimum payment of around £50 but the interest per month is about £46 itself!

What other deals could i go for to transfer the halifax debt to as i already have one of the best cards and would be refused for the other as they work in conjunction?

Any help much appreciated! :cheesy:

Eydon

Which cards do you already have?

Have you got any from the MBNA stable?

As for closing the cards with high APR - yes they will show up on your credit report as settled. Nothing more. It shouldn't affect your credit rating adversely. I suspect they want you to keep the cards in your drawer on the off chance that you use them again - after all they won't make anything from you if you close them.

One tip though, is to make sure you have a card available that has no balance transferred on to it. Then if an emergency arises you can use it and avoid the dreaded payment hierarchy trap.

wontfallforit

copper01 wrote: »

The above have both told me to keep my credit card in my drawer as it will effect my credit rating if i close the accounts and will show on my credit record.
Is this info correct or are they having me on?

I think it's an ambiguous issue, to be honest. On the one hand, you're closing down the amount of available credit you have, which may help you secure more and/or better credit in the future. However, on the other hand, by closing these cards, your credit file will show that you're using up a higher percentage of your total available credit, with your existing debt. However, this situation should dissapate a little if/when you start to chip away at your existing debt.

There is always the issue of card companies trying to keep your line of credit open, simply to boost customer numbers (and, ideally, to continue to earn money from you!)

Go with what feels right for yourself, especially if you want to close these cards in the interest of avoiding temptation!

Would also add that you might want to try to pay more than the min. payment if you can't secure a good balance transfer. Even an extra £10 per month will mean you're paying £14 of the card's capital every month, rather than the measly £4 post-interest that you're experiencing right now. Terrible trap to fall into :-S

CLAPTON

better to pay as much as possible off the CC with the highest APR and just the minimum (or maybe £10 more) on the CC with the lower APR

copper01

Thanks for the replies people,

The cards i have now are the barclaycard 6.9% apr and the halifax amazon mastercard at the rates as mentioned earlier.

The cheeky sods at capital one even rang me when i cleared it and told me to keep it open so as not to affect my credit rating and then upped the credit limit to £5k as a goodwill gesture! :mad:

I also have a abbey credit card thats still open but cleared at a APR of 24%

copper01

The idea when i went for the barclaycard was to transfer it all on one card but they never gave me enough credit limit! Would i be best off waiting for 6 months and then ask for an increase over the phone and tell them how much i want to bring over?

wontfallforit

copper01 wrote: »

The idea when i went for the barclaycard was to transfer it all on one card but they never gave me enough credit limit! Would i be best off waiting for 6 months and then ask for an increase over the phone and tell them how much i want to bring over?

If you've recently opened the card, i.e. recently had a credit search, it's probably best to wait a little while. Pay as much as you possibly can off the Barclaycard (whilst still trying to overpay on your other card), and see where you stand in 6 months.

If the Barclaycard 6.9% rate also applies to any future balance transfers, it might be worth it to periodically transfer balances from your old card onto your new card when you find yourself with a decent amount of available credit (which is where making large payments off the BC may help). There will be a fee for this - typically 2.5 - 3% of the amount you transfer - but you can still end up better off if you do your sums carefully.

I was in a similar situation a few years back. I owed £4000 to HSBC, and £2500 to Barclaycard. In my case, HSBC offered the better rate, so I'd pay £400 off the HSBC card each month, and then 'buy' some of my Barclaycard debt when I had around £700-800 credit available with HSBC. That way, I satisfied BC by clearing it so quickly (actually got offered a higher credit limit :-S), and was able to get it all onto one preferential rate card in no time. The fee (3%) was well worth it for me, but you need to assess your own situation and weigh up any potential costs.

Eydon

wontfallforit wrote: »

Pay as much as you possibly can off the Barclaycard (whilst still trying to overpay on your other card), and see where you stand in 6 months.

Have to disagree with this and agree with Clapton. Pay as much off your Halifax card as possible each month, and just the minimum payment (plus a bit extra if you can afford it) off the Barclaycard.

Priority has to be to get the card with the highest APR paid off soonest.

I understand what you are saying wontfallforit, but doing it your way you run the risk of Barclaycard reducing your limit as you pay it off (others on here have suffered from this), and then you are still left with the high balance on the high APR card with nowhere to transfer it to.

As soon as you can (in six months or so) try applying for the Virgin card (ran by MBNA). They are offering 0% for 16 months, so you'd be able to transfer whatever is left of your Halifax balance onto there.

wontfallforit

Eydon wrote: »

I understand what you are saying wontfallforit, but doing it your way you run the risk of Barclaycard reducing your limit as you pay it off (others on here have suffered from this), and then you are still left with the high balance on the high APR card with nowhere to transfer it to.

Ah, true. I've never found Barclaycard to be a 'reducer' in my experience, but I am but one person

No matter what option the OP chooses, I'd still advise - as in both of my posts - that they overpay the Halifax card wherever possible.

Large balances on 2 credit cards = nightmare.

copper01

Would there be decent enough cards for me to transfer the balance to in 16 months time if i took the virgin card out now or would i struggle to find one? I don't want to end up going over the time limit and paying the 18% APR.

Eydon

For that you need a crystal ball.

But bear in mind that during that 16 months you will have been overpaying on your Barclaycard, and chipping away at the Virgin balance, thus improving your credit rating.

And I know this sounds daft, but if you cancel the Halifax card then in 16 months time you'd be able to re-apply as a new customer if they had any special offers on.