Should I reduce credit card limit or just close it?

ohit

I have 5 credit cards totalling about £30k in combined limit, plus 1 charge card. Perfect credit history.

I simply use the cards and pay off in full every month. One of the cards, HSBC, does not offer any real benefit (i.e. no cashback). Have it kept it so far, with some light use every month, thinking it would be better to show my main bank provider good account conduct.

Is that 'good account conduct' a myth?
If so, should I just cancel it?
If not, should I leave its credit limit (£5k) or reduce it down to the min. £500?

Goal is to keep/improve credit history as much as possible.

jon142

If i was you, i would cancel the other 4 cards and only keep the credit card for my bank.

For example if i was with HSBC i would cancel the other £25,000 credit and just keep the £5,000 with HSBC. IMHO the bank you hold your account with are usually the most reliable when you need money as they know everything about you and can get a better picture.

Sounds like you have a 999 credit rating tho so you could go anywhere.

Big_Don

Big Don says cancel it. Good account conduct is a myth. Ever thought about using one of those cards to, maybe, invest in a Telly and.. er...watch a bit of Saturday night TV instead of worrying about piffle! No offence by the way!

blacksta

30K limit - Some people just love credit.

FLAPJACK

I think I would keep the one with the highest limit,(providing it hasn't got the highest APR) as it could be a problem in the future getting a card with a "useful" limit as the economic landscape has probably changed a lot since you aquired your cards.

Then really just use it as a tool, if you need something NOW you can obtain it without complications....look at it this way if you have a high limit.... it opens up the market to you as to what you can purchase with it.

If you see a TV for example it costs £1500-2500, you can get it If you didn't use the card and go for personal finance, right away that means a credit check..ok no problem you will get the loan but the down side is you have a check on your record...which for some reason can work against you these days.
Having said that though the personal loan will probably have a lower APR..swings and roundabouts I'm afraid!

Whatever the card limit is..it's always in your back pocket as an emergency fund.

chexum

To be honest, the most effect running several credit cards have on the credit file is to let you qualify for a new credit card easier... So if you don't enjoy the latest perks, you might as well stop keeping as many.

If most of your credit accounts are more than a year old (preferably 18+ months), and your circumstances are stable, with a good salary, you could get any new card, doesn't matter if you have one or eight...

So what can a card offer you?
- a large limit to "feel" prepared to give time to get to your savings?
- perhaps a 0% card with a few months left for the same?
- a low APR one for similar purposes?
- a backup card at home so that you can keep going when you lose your primary one?
- a card with cashback, loyalty scheme, or rewards that you can actually use?
- a card with no fx fees for slightly less expensive travels?
- a card with extra services that you use? (insurance, credit file monitoring)

If you don't need some of that, or you can get anything you want with less cards, there's not much point in keeping more than 2-3 of them, I would say.

Saints2011

jon142 wrote: »

Sounds like you have a 999 credit rating tho so you could go anywhere.

How exciting just so you no the 999 means nothing to any lender...

chanz4

One thing people are forgetting here, if the op pays in full he isnt a good customer to them. Also having too much credit can hamper loan applications, it depends on the income though. 999 sorry op, you have too much unused credit i score your loan at 29.9

Hazzinho

Agree cancel cards not required. More cards make you less appealing as you have potential for more debt and you're asking lenders to increase the potential debt.

ohit

Very interesting all. Thank you.

Each of the cards I have serve a specific purpose (I think), and well 'diversified' in terms of Visa/MC/Amex. i.e. Cashback, overseas spending, airport lounge access, and (as I first thought) reputation building with high street bank.

The borrowing I anticipate wanting a great credit reputation for is a mortgage. No deadline, certainly not in the near future, but I am sure at some point.

Had not before considered closing any of the others. There are certainly some months where I make good use of the combined limits (and, again, do pay off in full each month). The cashback especially during those months has added up over the years to be significant.

So glad I posted to ask. Will have a further think.

DarkFallout

If you apply for a mortgage the ratio between your income and total credit card limit matters ...

Therefore it may be worthy closing a credit card or 2 before applying for a mortgage ...