To close credit cards....or not?!

rubyinthesky

So having moved around some debt and saved myself £200 a month on repayments/interest, I now need to know, do I close the empty credit cards or not?

Barclaycard - paid off with loan from my bank and part B/T - £9300 credit limit - 0 balance
Santander - I'd phoned to close this last weekend, but was talked in to keeping it - I did in case I needed it for B/T from the B/card - £6000 credit limit - 0 balance

I have a £7k personal loan now, which I am going to 'snowball' with the two credit cards I have left (debt free Nov 2015!)

MBNA - £3500 - credit limit is £4k
Halifax - £2500 - credit limit is £2700

My thoughts are to keep one of the big limit cards open, in case of an emergency, but also does it look good that I have been given such a high credit limit? I am thinking close the Santander?

I earn just over £20k pa if this makes any difference?

Thank you in advance you clever people!

moneypenny2k

but I'd say close, firstly because you have access to a lot of debt, that may stop you getting a better interest free deal later and secondly because you may be tempted to use the card...

thriftymomma

I wouldn't close the accounts - you never know when you might need the safety net. However, remove the cards from your wallet and DO NOT use them.
All you would be doing by closing the accounts would be making the proportion of debt outstanding look higher, which could have a worse affect on your 'credit rating' than just leaving them as they are.

aimzrabbit

thriftymomma wrote: »

I wouldn't close the accounts - you never know when you might need the safety net. However, remove the cards from your wallet and DO NOT use them.
All you would be doing by closing the accounts would be making the proportion of debt outstanding look higher, which could have a worse affect on your 'credit rating' than just leaving them as they are.

im not so sure

i had 5 credit cards paid them all off closed them all down and just had 1 santander 123 left with a 500 limit and 450 on it so technically i would have 90% maxed out credit even though i had available balances before

i just did the nationwide qoute search and it matched me at 3800 and 15.9 for a new card

i couldnt get a nationwide card when i had the other cards open

i think its down the the new lenders criteria more than just a generic number of cards open or closed

chattychappy

On balance I'm in the thriftymomma camp and would keep the CCs open. Whilst new customer deals tend to be better than existing customer offers, new cards often come with lower limits.

If you don't use cards for a while, you might find they get closed anyway - so I'd put the odd transaction through just to keep them live.

You say "Santander". If it's Santander ZERO then certainly keep that open. It's great for overseas transactions and ATM withdrawals.

CLAPTON

why do you need to do anything?
what do you want to achieve?

are you seeking to improve your credit rating?
are you concerned about spending because credit is there?
or about 'emergencies'?
are you planning to apply for another card soon?
or a mortgage?

with a modest income you have a frightening level of actual debt so your primary consideration needs to be reducing the debt asap and taking advantage of any opportunity to reduce the interest rate


assuming you have your spending under control, I would retain the two empty the CCs on the hope that they may offer a good BT deal
however, make sure you use them occasionally for things you buy anyway and pay in full each month otherwise they are likely to close the cards if they are dormant for too long.

YorkshireBoy

Lenders use some key ratios when making decisions as to a) whether to accept an application, and b) how much credit limit to give. Excluding any overdraft facilities (and other credit facilities you've not mentioned), yours are...

Used credit to available credit - 27% (not excessive in itself)
Used credit to salary - 30% (not high, but the loan increases it to 65% which may be considered too high by many lenders)
Available credit to salary - 110% (fairly high...too high for many lenders?)

It looks like your credit limits are getting progressively lower with each application (assuming Halifax was the last one?). In fact, I'm a little surprised Halifax accepted you when you already had such high available credit...unless you bank with them?

I don't think your salary will support further applications without closing one or more accounts, so if you'll have a need for further credit you should bear that in mind (and allow 2-3 months for the closure(s) to find their way to your CRA files).

Just out of interest, what do you mean by?...

I have a £7k personal loan now, which I am going to 'snowball' with the two credit cards I have left (debt free Nov 2015!)

rubyinthesky

YorkshireBoy wrote: »

Lenders use some key ratios when making decisions as to a) whether to accept an application, and b) how much credit limit to give. Excluding any overdraft facilities (and other credit facilities you've not mentioned), yours are...

Used credit to available credit - 27% (not excessive in itself)
Used credit to salary - 30% (not high, but the loan increases it to 65% which may be considered too high by many lenders)
Available credit to salary - 110% (fairly high...too high for many lenders?)

It looks like your credit limits are getting progressively lower with each application (assuming Halifax was the last one?). In fact, I'm a little surprised Halifax accepted you when you already had such high available credit...unless you bank with them?

I don't think your salary will support further applications without closing one or more accounts, so if you'll have a need for further credit you should bear that in mind (and allow 2-3 months for the closure(s) to find their way to your CRA files).

Just out of interest, what do you mean by?...

Sorry, I've done the snowball calculator and I'm going to pay off Halifax, followed by MBNA then the loan, which means that I'll be debt free in November 2015.

I was pretty shocked when I realised quite how much debt the amount totalled to - I'm definitely NOT going to be using the cards. I give them to my husband, so the temptation isn't even there, but I absolutely refuse to borrow any more. Enough is enough. If I need something in the future, I'll save for it.

We will need a new mortagage soon.

I have an overdraft facility of £750 on my bank account, but I'm determined not to use any of it and may actually request this is reduced. I can afford to pay around £180 - £200 additional to the minimum repayments each month, so I am going to pay off what I owe - it's been a wake up call. I remember transferring a £300 cc balance that I was paying interest on around 8 years ago - that was the total level of my debt and I wish I was in that position now!

rubyinthesky

CLAPTON wrote: »

why do you need to do anything?
what do you want to achieve?

are you seeking to improve your credit rating?
are you concerned about spending because credit is there?
or about 'emergencies'?
are you planning to apply for another card soon?
or a mortgage?

with a modest income you have a frightening level of actual debt so your primary consideration needs to be reducing the debt asap and taking advantage of any opportunity to reduce the interest rate


assuming you have your spending under control, I would retain the two empty the CCs on the hope that they may offer a good BT deal
however, make sure you use them occasionally for things you buy anyway and pay in full each month otherwise they are likely to close the cards if they are dormant for too long.

I didn't realise they closed the accounts if dormant - I do have the Santander Zero and didn't even realise it ws still open, until I phoned to close my Santander bank acc last weekend and they checked for me. I had no idea I had a £6k credit limit on it - I got the new card this week, but until then I've not had any contact re the credit card for years as I recall.

are you seeking to improve your credit rating? Would be good to improve it- only made minimum payments on cc and no defaults or anything - Noddle said 3/5 and 650 something...I know it could be better! I'm a perfectionist and want top score!!
are you concerned about spending because credit is there? NO! Not happening
or about 'emergencies'? No, my husband would cover them
are you planning to apply for another card soon? Absolutely not - I want rid of the debt and never want another credit card. The only thing I might need to do is get one in 12 months for balance transfer for the 0% B/T coming to an end, (although snowball calculator seems to show that I'd not be paying interest - which I can't understand as one of them is only 12 months and the calculator is in month 23 at this point!)
or a mortgage? Yes Deal coming to an end - we've not been able to find anything suitable to replace it yet

rubyinthesky

So, I think there was views on both sides of the 'to close or not to close', but I've now had notification that I've been accepted for the Fluid card with a balance of £3000 that I'd applied for before I got my loan with my bank!! So, I think I definitely need to close some cards but which ones???

So I now have:

MBNA - £4k limit - £3600 on it (0% until Sept 2013)
Halifax - £2700 limit - £2500 on it (0% to April 2014)
Santander - £6k limit - £0 on it (no current offers for B/T)
Barclaycard - £9300 limit - £0 on it (0% until September 2013)
Fluid - £3000 limit - £0 on it (0% for15 months B/T)

Any advice? I have no idea what to do. And I'm not planning on spending, although I do need a new laptop and was thinking of putting around £400 on the new Fluid card - 5 months interest free on purchases and paying that off monthly by standing order along with asking for money from my husband and parents towards it for Xmas and my birthday.....or is this just my spendaholic tendency rearing its ugly head....I pledge that it will be paid off in five months After this, this card, along with all of the others will be in credit card prison with my husband as gaoler.:rotfl:

Oh, and one further question - if you have a 15 month offer, and this is open to you for 3 months, does that go from the date the card was opened, or the date you did the balance transfer. So, if I did a B/T in three months, would that give me 15 months from then, or 12 months?

YorkshireBoy

rubyinthesky wrote: »

I do need a new laptop

"Need"...or want?

is this just my spendaholic tendency rearing its ugly head

Depends on the answer to the above question.