keep it or close it?

sanova76

I have a credit card with £650 limit but I never use all of it. Mostly I spend about £300 - £450 per month. I pay the full balance or most of it (i.e £350 if my balance is over £450) every month.

Is it better if I pay it all and close it? If I pay the balance every month is the same like I spend the same amount of my debit card anyway?

the only benefit is if I don't have money in my bank account, I can use it to make a purchase.


TIA.

Su

[Deleted User]

Keep it, use it and pay if off in full. Otherwise you'll end up with no credit history, and to all intents and purposes, be as financially trustworthy as a new born baby in the eyes of any future lenders

CLAPTON

depends upon your circumstaances

but it's not sensible to pay any interest so always pay in full each month

using a CC regularly helps to improve your credit rating which can be useful if applying for a mortgage or a contract mobile etc and a CC does offer section 75 protection for you purchases

Plxply

As others have said keep it. Ever since turning 18 I have used my credit card exactly as I was using my debit card and paying it off in full every month with no interest. You get a lot of benefits (credit report, Section 75) in comparison to little work (paying it off each month).

Anthorn

I agree with keeping it to keep a credit history going.

But I disagree in part on paying the full balance every month: Credit card companies are not charities which are there to give us something for nothing. They're in the biz to make a profit and if you pay off the balance every month they're making nothing. So throw them a carrot once in a while and pay off a quarter or half of the balance.

If you pay off the balance every month you may well be a good credit risk but a bad profit maker which can lead to rejections as if you had defaults because you are unlikely to make a profit for the lender! Or to put it another way, there's nothing in it for the lender!

Which looks better on a credit report? A history of always having a nil balance or a balance which is steadily increasing and then steadily reducing to nil?

With my credit card I mostly pay the balance in full but sometimes I don't but I always cover the outstanding balance and interest with a deposit to my savings account. That way I have a balance but not living beyond my means, I am justifying my need for the card to the lender and proving that I am a good credit risk.

[Deleted User]

Anthorn wrote: »

I agree with keeping it to keep a credit history going.

But I disagree in part on paying the full balance every month: Credit card companies are not charities which are there to give us something for nothing. They're in the biz to make a profit and if you pay off the balance every month they're making nothing. So throw them a carrot once in a while and pay off a quarter or half of the balance.

If you pay off the balance every month you may well be a good credit risk but a bad profit maker which can lead to rejections as if you had defaults because you are unlikely to make a profit for the lender! Or to put it another way, there's nothing in it for the lender!

Which looks better on a credit report? A history of always having a nil balance or a balance which is steadily increasing and then steadily reducing to nil?

With my credit card I mostly pay the balance in full but sometimes I don't but I always cover the outstanding balance and interest with a deposit to my savings account. That way I have a balance but not living beyond my means, I am justifying my need for the card to the lender and proving that I am a good credit risk.

I do understand where you're coming from here but I have to say that I disagree. Your logic is sound but you forget the fact that card issuers make money from each transaction you make on the card, not just from interest on your balance. As far as they are concerned they will make money from interest from a certain group of customers but they are perfectly happy for other customers to use the card regularly and pay off in full.

This is my understanding and based on my own experiences but I could be wrong. During my most recent application (Amex Platinum Cashback) I was actually asked if I intended to pay the balance in full each month and I said that I would - didn't stop them giving me a fairly large credit limit though!

CLAPTON

Anthorn wrote: »

I agree with keeping it to keep a credit history going.

But I disagree in part on paying the full balance every month: Credit card companies are not charities which are there to give us something for nothing. They're in the biz to make a profit and if you pay off the balance every month they're making nothing. So throw them a carrot once in a while and pay off a quarter or half of the balance.

If you pay off the balance every month you may well be a good credit risk but a bad profit maker which can lead to rejections as if you had defaults because you are unlikely to make a profit for the lender! Or to put it another way, there's nothing in it for the lender!

Which looks better on a credit report? A history of always having a nil balance or a balance which is steadily increasing and then steadily reducing to nil?

With my credit card I mostly pay the balance in full but sometimes I don't but I always cover the outstanding balance and interest with a deposit to my savings account. That way I have a balance but not living beyond my means, I am justifying my need for the card to the lender and proving that I am a good credit risk.

this is just wrong for the better credit cards


the best customers pay in full every month and get offered the best deals as they are the least likely people to ever default.

CC companies make money by charging the retailer on every transaction.
so they want people who make a lot of expensive transaction but never default.

Anthorn

I realise that my post does take some effort to get your head around particularly since we are always told to pay off the full balance. But that isn't really very profitable for the credit card companies who are in the business to make a profit. Yes they make some money on transactions but compared to interest and charges it's relatively insignificant.

Prior to 2007, I would have said the same as Martin as the banks and credit card companies love customers who are always in debt, always pay interest and never default. But these days it's clear that while they still like us to pay interest they like that to be over the short term and fully pay the balance over the short term so there is a quick turnover of funds. That applies to both credit cards and bank overdrafts.

Of course credit card companies love us to pay off the full balance every month but only because it tells them how much we can afford to pay every month. Ultimately, they will be appraising us for potential profit and that means paying interest.

http://www.moneysavingexpert.com/loans/credit-rating-credit-score

Plxply

Although credit card companies do like people who generate interest there is a reason that MasterCard Elite and American Express exist and are both issued only to those with prime credit. Both charge the retailer higher fees and their customers are most likely to pay their bills in full on time, especially with American Express as some of their cards are even deferred debit cards.

staffie1

I must say - I couldn't give a monkey's if the credit card company makes no profit on my transactions. I use my credit card and pay off every penny each month. I use it for my own convenience and to manage my finances and they never make a penny out of me. In the bad old days when I was up to my ears in credit card debt (and thankfully those days are long gone) they made plenty!

Anthorn

Plxply wrote: »

Although credit card companies do like people who generate interest there is a reason that MasterCard Elite and American Express exist and are both issued only to those with prime credit. Both charge the retailer higher fees and their customers are most likely to pay their bills in full on time, especially with American Express as some of their cards are even deferred debit cards.

But we can probably expect people with such cards to spend more and so generate more profit for the retailer which justifies the fees.

But that could change due to lobbying in the E.U. for retailers to pay less. When this happened in the U.S. it resulted in higher fees for card-holders. Have a look at Mastercard's site, https://dontdiscard.co.uk/