Credit card with zero balance - keep it or close it?

BettySpofkins

Hello again experts -

I've a credit card with a surprisingly large credit limit (and large interest rate too!) which I never, ever use, and do not plan too. In fact I think I've forgotten the PIN.

It seems like the polite thing to do is close it and forget about it, but someone mentioned that keeping it open might be good for my credit file. Someone else mentioned it might not be.

What should I do?

JA1000

Keep it, you credit score is judged against how much available credit you have against how much you use. I would also aim to use it for items to keep it ticking but have a DD set up to pay in full so petrol or something.

You never know one day!!!

iamchrisli

will ask to drop the credit limit first, in case the card has gone to the wrong hand. If you have other credit cards, and use them more regular, then you need to think how likely you will use it. If the chance is less than 50%, --> close it!

chattychappy

I would keep it. You might get a decent offer on it, suddenly get your others closed... you never know. There could be circumstances in which your rating might improve by closing it, but in most cases it will make little difference or be better from a rating point of view to keep it open.

If you are concerned about security, you could just cut it up. Whilst this wouldn't stop all kinds of fraud, it would stop theft of the card itself. If you decide to use the account it should be no problem to ask for a replacement. (Though I did see a post recently from someone who claimed that this prompted a search and the account being closed. Seems weird to me.)

Be prepared for a letter from the issuer saying they will close it because of dormancy. When I've had these they've always given me the chance to phone in to keep the account running.

dtsazza

MSE has its own dedicated article about this - Old Credit Cards - should you cancel them?

The general consensus that I get from there, assuming you have other cards that meet your CC requirements, is that you should cancel the unused ones. The only reason not to is for existing customer offers - but then you miss out on new customer offers, which (IMHO) are on the whole more profitable.

chattychappy

dtsazza wrote: »

The only reason not to is for existing customer offers - but then you miss out on new customer offers, which (IMHO) are on the whole more profitable.

True, but the snag I find is that 1) you might not get the new card, 2) if you do, you tend to start off with a lower limit which may restrict the value of the offer.

bouncydog1

I've also used old cards with nil balances to get a good deal if I needed a BT for instance, by ringing up asking to close the account. When asked why I have indicated I have better offers available (which has been true). Existing provider has then come up with good offers - e.g 0% BT for 12 months.

knightstyle

In my view you should keep it, get a new pin by saying you have lost your old one. You may not be able to get a new card at some point in the future and your old unused card may sent you a good offer, 0% transfer for example, out of the blue. Barclaycard did this to us recently, we haven't used the card for years. Was able to transfer money to sons account, cost 3% and he now is paying it off interest free till November.

lisyloo

If you have other lines of credit and enough credit history then I would close it for the following reasons.

1) Could attract a dormancy fee which you might not realise.
2) Stops you getting new customer deals.
3) Available credit could stop you getting other credit you DO want.
4) May be stolen/used fradulently and you might not even notice for a while.

The downsides are.
1) It closes a line of credit.
2) It's one less card on your credit file (eventually).

So depends on your scenario, but with enough other lines of credit and credit history then I'd certainly close it.

Ralphy101

lisyloo wrote: »

If you have other lines of credit and enough credit history then I would close it for the following reasons.

1) Could attract a dormancy fee which you might not realise.
2) Stops you getting new customer deals.
3) Available credit could stop you getting other credit you DO want.
4) May be stolen/used fradulently and you might not even notice for a while.

The downsides are.
1) It closes a line of credit.
2) It's one less card on your credit file (eventually).

So depends on your scenario, but with enough other lines of credit and credit history then I'd certainly close it.

Im with Lisyloo on this one.

As long as you have a decent credit history i would close it.

Credit lenders in recent times, do not like to offer credit to people who have too much credit available to them, as they see the risk of your debt spiralling out of control as higher than those with low available credit.

Closing the card, will reduce your available credit.... and depending on the card company you'll probably receive a letter in the post, tempting you back with a 0% offer, after "x" months - this isnt unheard off.

Also if the account was run in a good fashion it will stay on your credit file for 6 years anyway, aiding future applications.

If you dont use it close it.

BettySpofkins

Thanks everyone, seems there is no clear cut answer, but plenty to think about! I think I'll ditch it, as I believe I have good credit already, and I'll soon be applying for a hefty mortgage - soon enough that I imagine the card will still show as part of my history of being well-behaved with this sort of thing.