Paying off a credit card in full, then keeping the balance at zero?

CaimanReid

A friend of mine recently paid off his £1000 credit card debt and cut up the card, but did not close the account. He reckons having a grand available credit is good for his status in the eyes of potential lenders.

Would it not be better to still make small purchases with the card and just pay them off in time? Obviously, this opens up the temptation to spend more of the available funds, but I just wondered, is having a large credit facility that you never use really helpful or can it actually be detrimental?

bottleofred

Hi caimenreid,

It depends really. Some credit card companies hate dormant accounts and people they can't get interest off on a monthly basis. But it sounds like your friend only has one card and I would not have thought this is the case. A good, on time repayment history over a period of time is good, but not at the expense of him getting into trouble with the card.

gingertech_2000

I would recommend closing the card. The credit reference agencies would then see this as a settled account and that he has made the necessary payments to clear it and close it.