Should I keep or close four credit cards?

leith

Hi

Until recently, I had balances on four cards:

- American Express
- Creation Finance
- Tesco
- LloydsTSB

I've recently moved all balances onto a Barclaycard with 0% transfer for a -very- long time!

The limits on the four empty cards are: 2500, 5500, 4000, 8000 - total £20k

The new Barclaycard has a limit of £17,700 and I've transfered about £13k onto it.

Obviously I'll cease using the other cards (and have already cut them up) - but I'm wondering whether I should keep the accounts , or whether to close them.

My preference is to close them, but I fear that closing that amount of credit will have a negative effect on my credit report (i.e. going from showing £37k available with 35% / £13k used, to showing 73% used).

What's the feeling on this? Keep available credit, or close it down. I need to be sure that it won't harm my credit profile, as I'm looking to move house next year, and increase the mortgage borrowing significantly.

Tixy

Will you pay off the £13k before the barclaycard 0% deal finishes? If not might be worth keeping one or 2 cards in the hope they'll offer you a 0% deal when this one finishes.

I'd keep at least one for spending (emergencies. section 75 protection etc). If it were me of those I'd probably keep the tesco one (personal choice as opposed to a specific reason).

In terms of your credit file, 5 open cards would be seem as a lot, especially if most are unused and in terms of credit to used ratios its difficult to guess as different lenders won't judge this the same. I guess I'd hedge your bets and go for somewhere between the 2 scenarios.

leith

Yeah, the balance is due to be cleared in 14 months.

Oddly, the Barclaycard was advertised with 18 months at 0% on balance transfers, but when arranging the transfers, the chap on the telephone insisted it was 20 months. It makes no odds, as I'm just taking advantage of Barclaycard to clear my debts!

I'd have thought banks would see someone with large unused credit lines as good - but maybe not ?

Ilona

I had a couple of cards which I stopped using, the credit card companies informed me that they were closing the accounts because of inactivity. That was fine by me.
Ilona

Tixy

Well the problem with large unused credit (if you were applying for anything else) is that the new lenders could be wary you would run up all that debt as well spend the money from the new account you are trying to apply for and then struggle to repay everything.

I think you'd be better keeping 1 or 2 of the cards open and possibly using them occasionally and paying off in full the next month. That means they are less likely to be closed through dormancy and help maintain an active positive credit history.