Credit Card Rate DECREASE - Should I request limit decrease??

maz7

With all the talk of rate-jacking I thought I'd check my credit card statement to see my rate and to my surprise it has gone down!
It is a Halifax card and when I originally took it out in 2008 the rate was 14.9% but having checked back through my statements it was reduced to 12.9% five months back.
There is an £8,000 credit limit on the card and I never go anywhere near that figure (spending at most about £600 in a month) and always paying off in full each month.
Have only this one credit card but do have an Amex charge card (must pay in full each month) which I use for most spending, using the Halifax CC only when AMEX not accepted.

Question - Should I ask for the Halifax card to have it's credit limit reduced or just keep it as it is?
Would it be better for the future to lower my available credit (as in my credit report?)

Any advice would be great, thank you

ironlady2022

If you reduce limit, it will probably stand you in better stead IF you were thinking of applying for new financial products, eg remortgaging, new loan, new credit card. How it works is, if you apply for new credit, they will see your exposure (limits to income) to be reduced say from 6k down to 3k. If you always pay in full, then I would suggest not lowering it, just in case of emergencies in the future (you never know). And if you decrease now to increase in future, then this could involve another credit check and the increase that you MAY want is not guaranteed then. Hope that helps.

property.advert

That is cobblers. This idea that having unused but available credit is a bad thing is an urban myth. Nothing wrong with having options.

Paul_Herring

maz7 wrote: »

Question - Should I ask for the Halifax card to have it's credit limit reduced or just keep it as it is?
Would it be better for the future to lower my available credit (as in my credit report?)

If you're not planning on applying for debt elsewhere, leave it as-is. It gives you an immediate loan should you need it in an emergency (boiler breakdown, new washing machine etc.)

Your 'credit-score' per-se will vary from institution to institution because each have their own formulae to calculate it, and place more or less emphasis on things such as credit available, credit used, applications made in past X months etc, thus the ones you pay Experian for (for example) are useless.

property.advert wrote: »

That is cobblers. This idea that having unused but available credit is a bad thing is an urban myth. Nothing wrong with having options.

It's a bad thing if you're wanting to apply for more credit. If your current available (used/unused) credit is high, you're less likely to get a high limit/acceptance with another company.

On the other hand, as I've pointed out above, if you're not bothered about applying for credit, then it's not a problem.

maz7

Thank you for your advice.
I'm not really thinking of taking on more debt (been there in the past) and now working towards being mortgage free.
Having said that you are right about it giving me an immediate cash figure for emergency so think I will keep my CC as it is, thank you all.

Next step getting mortgage gone.
Took a base rate lifetime tracker at base + 0.34% about four years ago so monthly payments have reduced right down and now saving extra money in high interest (well, high interest for these times) and will overpay when rate rises.

Thanks again

ironlady2022

maz7, you should think of overpaying now, as it will reduce your term and save on interest! Though I agree you should keep some monies spare for when bank of england base rate increases. Speak with your mortgage provider and they can recalculate.

BugsyBrowne

property.advert wrote: »

That is cobblers. This idea that having unused but available credit is a bad thing is an urban myth. Nothing wrong with having options.

Totally agree think its just hearsay, I just think if someone get turned down for credit who has a lot of unused but available credit find this excuse why they were turned down, but really the real answer is they just don't want you as a customer..

Paul_Herring

mayling03 wrote: »

maz7, you should think of overpaying now, as it will reduce your term and save on interest!

They're currently paying 0.84% interest on their mortgage.

A savings account paying 1.05% before tax (for a basic rate payer, 1.4% higher rate) will be earning more interest in savings than is being charged on the mortgage.

Maz isn't doing anything wrong (unless the sums currently saved are larger than any single payment allowed without penalty on the mortgage when they do decide to move the money from savings to the mortgage when the rates go up.)

Paul_Herring

star-fire wrote: »

I just think.

Too much thinking and not enough research.

http://www.stoozing.com/g_score.php - specifically this page:

Should I close my credit card when I have finished stoozing with it or should I leave it with a nil balance?

Experian Response

It is important that you close down any credit cards that you no longer use; otherwise new lenders might be unwilling to give you further credit. You should also bear in mind that a lender is unlikely to accept a new application from someone who already has one of its cards but does not use it.[...]

While it's discussing the cards as a whole, large unused balances can be a proxy for whatever they're looking for.

BugsyBrowne

Paul_Herring wrote: »

Too much thinking and not enough research.

http://www.stoozing.com/g_score.php - specifically this page:



While it's discussing the cards as a whole, large unused balances can be a proxy for whatever they're looking for.

Yes but as we all know its still hearsay, you have now give me a quote from experian and they charge people for credit scores, it all boil down to we will never know how banks do their credit scoring, yes we all have theories the same as martin lewis, but until the banks explain(which they won't) we will all be guessing for many years to come..

maz7

Paul_Herring wrote: »

They're currently paying 0.84% interest on their mortgage.

A savings account paying 1.05% before tax (for a basic rate payer, 1.4% higher rate) will be earning more interest in savings than is being charged on the mortgage.

Maz isn't doing anything wrong (unless the sums currently saved are larger than any single payment allowed without penalty on the mortgage when they do decide to move the money from savings to the mortgage when the rates go up.)

Thank you for your reply.
We are saving £250 per month into an account earning 3.0% gross, so building up a nice little sum in there.
We can overpay £500 per month on the mortgage so our thoughts were to (when our mortgage rate is higher than nett savings rate) to overpay £500 per month from the fund built up and bring mortgage term down that way and saving the interest.
Am i right in my thinking?
Sorry to all if my original post has now crossed over to mortgages!