Reducing Credit Card Limit

judith85

Hi,

I'm new to the forum and I'm not sure if this is the best place to post but basically I have two credit cards I'm currently paying off. I wanted to know if it was a good idea to request a decrease to my limit once I had paid off a certain amount of money. Is this a good idea or will it play havoc with my credit rating?

I was also wondering if you can close a credit card account but continue to pay off the remaining balance. This does sound too good to be true but I thought it best to check.

Thanks for any advice.

Judith

cos_2

a) If you don't want to use the credit limit then, of course, it's a spot on idea to reduce it. You can do this by asking for a limit reduction or just, quite simply, not use it. Only the credit companies can tell you if they care.

b) Yes, you can close your account and pay off the balance as per your contract. Most credit card companies would expect this

xx

YorkshireBoy

cos wrote: »

a) If you don't want to use the credit limit then, of course, it's a spot on idea to reduce it.

It's not always a good thing, depending on personal circumstances.

For example, whilst reducing available credit may assist applications made elsewhere (if a BT card is required to move debt) it may also adversely affect your used/available credit ratio meaning you appear overly indebted.

Without knowing the OP's total available credit, total indebtedness, income, and other financial circumstances it's impossible to suggest the best course of action.

Jammi

Welcome to the forum.

If these two cards are the only credit cards you've got, then there isn't really much to be gained from a credit rating point of view by reducing the limits on these cards, that said there isn't much to loose either except that as you reduce the limits you will appear to be using a greater percentage of you available credit, and the credit card company may not be willing to raise the limit should you need a higher limit at some point in the future.

I don't think that you can actually close a credit card account until you've paid of the balance, If I'm wrong I am sure someone will point it out.

It appears from both your questions that you are weary of running up further balances on these cards, if that is the case you could simply cut up one or both of these cards and then close the account as soon as it is paid off. However you should consider that there are benefits to owning a credit card, and its good to have at least one open albeit on a lower limit.

ironlady2022

Hi

1) If you are afraid that you will run it up some more, then I suggest cutting it up. You may regret reducing your balance in the future, in which case if you want an increase, this requires a further credit check.
2) You categorically cannot close a Credit Card unless the balance is at 0. So you can only close it if you pay it all off in one go. If not, the credit card needs to remain open til you clear it.