Which CC to shed?

lordFSA

Over the past few years I've accumulated a few credit cards and now would like to seek your advice on which ones to shed so I can get better no-interest deals in future. I started opening them to build up my credit rating, so everything was, and is, always paid off in time. Then I felt safer having them as a back up should my finances go pear-shaped.

I then started stoozing because of a few unexpected automobile related expenses. I read somewhere that the better deals are usually to be had by closing accounts, waiting a few months and reapplying as a new customer.


Santander 123
Limit: £1500
APR: 17.4%
Balance: £187
Benefits: 3% payback on fuel
NB: My main spender, paid off in full.

Barclaycard Standard
Limit: £4500
APR: 24.9%
Balance: £22

CapitalOne Classic
Limit: £1500
APR: 18.3%
Balance: £0
Benefits: Free Equifax alerts

HSBC Classic
Limit: £2500
APR: 16.9%
Balance: £40

M&S
Limit: £3000
APR: 15.9%
Balance: £0
NB: Interest free balance transfer ended 04/12

Virgin Money
Limit: £7400
APR: 15.6%
Balance: £3000
Benefits: Interest free balance transfer till 10/13

Tesco Bank
Limit: £1300
APR: 18.3%
Balance: £1250
Benefits: Interest free balance transfer till 07/13



Essentially, I would like to improve my chances of getting something to transfer the Virgin and Tesco balances to when their interest free periods end. My main current account is with HSBC, but I also have current accounts with NatWest, Lloyds, 1st Direct and Metro Bank.

Many thanks in advance.

lordFSA

Inertia prevented me from closing any of those accounts...but this month I've been offered 18 month 0% BT for 2.8% fees from Barclaycard (limit of £5000 now) and M&S (limit of £3000).

Couldn't have come at a better time now that a couple of my interest free BT periods are nearing to an end.

So now I'm even more confused about the whole 'shedding excess CCs' thing!

You-kip

Did you make your own APR's up on your credit cards?

Eonel

OP - you have credit limits greater than £20,000 and a balance of less than £5,000. It appears you have been offered a £5,000 Barclaycard so you can rollover 0% interest this time.

You need to decide how much credit you need to have available. For example,you may decide you need £5,000 for your balance + another £5,000 available for a rainy day = £10,000

You then close down your cards,from highest APR to lowest, until you meet that number. That will make your life simpler if you do need to rollover any remainder of your balance onto another 0% deal when Barclaycard expires.

Nothing to be too confused about

lordFSA

You-kip wrote: »

Did you make your own APR's up on your credit cards?

They're all off my statements...what seems fictitious about them?

lordFSA

Eonel wrote: »

OP - you have credit limits greater than £20,000 and a balance of less than £5,000. It appears you have been offered a £5,000 Barclaycard so you can rollover 0% interest this time.

You need to decide how much credit you need to have available. For example,you may decide you need £5,000 for your balance + another £5,000 available for a rainy day = £10,000

You then close down your cards,from highest APR to lowest, until you meet that number. That will make your life simpler if you do need to rollover any remainder of your balance onto another 0% deal when Barclaycard expires.

Nothing to be too confused about

Thanks for showing me another way of looking at things. I was spending too much time searching for reviews and user experiences regarding which lenders tend to offer preferential rates/deals to existing customers vs those which would rather have 'regenerating' customers.

guesswho2000

Eonel wrote: »

...You then close down your cards,from highest APR to lowest...

Depending on whether the high apr cards offer better benefits. Doesn't look like its relevant to OPs position, but if a card with a high APR offers a benefit a low APR card doesn't, and you pay off in full, keep the higher one.

For example, I have my MBNA platinum at 16.9% with a 0% BT, Halifax Clarity at 21.9% - the clarity will always win because of the overseas benefits.

One piece of advice for OP - keep the Tesco one when its done, and use it now as a clubcard, particularly when buying fuel - Tesco CC as the clubcard and paying with the Santander 123 means double clubcard points on top of the 3% cashback.

guesswho2000

lordFSA wrote: »

They're all off my statements...what seems fictitious about them?

It'll be the fact you appear to have used the simple interest rate rather than the actual APR; Capital One, in particular, show this on their statements instead - 18.3 simple is approx 19.9% APR, for example.

You-kip

Not only what above has said but I'm positively positive that the Cap1 classic comes in around the 35% mark.

Roland_Sausage

guesswho2000 wrote: »

It'll be the fact you appear to have used the simple interest rate rather than the actual APR; Capital One, in particular, show this on their statements instead - 18.3 simple is approx 19.9% APR, for example.

I thought I understood interest rates quite well, but apparently not.

Can you explain the difference between the simple rate and APR and how they are calculated?

My Capital One statement quotes simple rate of 14%. How does this translate to APR?

Many thanks

Eonel

The same interest payments can be displayed as many different rates.

In the vast majority of cases, interest is calculated on a daily basis. This means you only pay interest on the current balance of what you owe. In the simple case of a loan, if you pay off the loan halfway through, you only get charged interest for the time you had the loan.

Let us say it is going to cost you £100 to borrow £1000 over 1 year.

In reality the balance of the loan goes down each month as you make payments. So you can think of the interest rate as 20% of a £500 average balance of the loan.

Or you can think of the flat rate of the interest of the loan as simply 10% of the amount borrowed.

APR is the first of the examples above. All lenders are required by law to quote the APR and it is the leveller - the only rate that you can compare across products and lenders. It is the number you should be looking at.

With credit cards or anywhere fixed/annual fees are involved then the calculation of APR becomes more complicated and assumptions are made of what/when you will pay off.

But again, just focus on the APR - it is the only consistent measure. Hope this helps.