When to cancel my credit card

Dizzy651

Hi

The interest free period (purchases) on my Tesco credit card has just ended. This was my first credit card and I used it to assist with doing up my house so some months I put a few hundred quid on and other months I spent nothing. I cleared the debt completely some months and only part of it in other months when i'd spent more (I always paid more than the minimum). I've just paid off the remaining balance and the interest free period ends this week.

I've seen Martin's thread about cancelling improving your credit score so I want to cancel the card but i'm concerned that future lenders may see that I won't make them any money if i use it for the interest-free period and then cancel immediately. I'm not planning on using it anyway so should I leave it a while before cancelling? I'd prefer not to because i'm one of those people that make lists and it will have to stay on my list if not done now

This may or may not impact on your answer - I'll be looking to remortgage my house in Feb/March 2014 and I've already applied for and got a new card 0% purchases with Halifax to use for the next year's purchases. Not planning any other credit applications in the next few months.

Thanks

Farside

If you are never going to use it again then i'd cancel it, But i have 3 cards, I never use them though but i keep them incase of emergencies. It's always better to have em and not need them then to need them and not have them. My creditscore is excellent with 3 cards, I'd say definitley don't get more then 3 though as then lenders can see you have a large amount of cash available to you so you could get into debt easier then someone without it. But for you, 2 cards, is fine. Also it'll help your score to just use it once a month for something small and pay it all back on payday so you don't get charged interest.

stephane_2

You need to keep it even if you are not going to use it.....potential lenders like to see accounts that I have been managed & kept open for a long time....

rb10

As you can see there are arguments for how it can impact your credit file whichever way you do it ... so I'd suggest doing whichever is easiest for you.

If the clubcard points make it worth keeping, then keep it. Otherwise, close it.

JakeGreen

stephane wrote: »

You need to keep it even if you are not going to use it.....potential lenders like to see accounts that I have been managed & kept open for a long time....

Yes, keep it open. Lenders want to see a good history of you managing your credit. They look at the average age of your accounts.

Lots of new accounts are viewed negatively.

Old accounts, used from time to time and paid on time = good.

(By on time I mean, more than the mimumum monthly payment, it's not necessary to clear the full balance each month to keep future lenders happy)

From what I understand making only the minimum monthly payments can be viewed negatively by future lenders as it indicates that you may be struggling financially. This may not show the full story as you may be on a 0% promotional rate and may have chosen to make a savvy investment rather than paying off the credit card.

rb10

JakeGreen wrote: »

From what I understand making only the minimum monthly payments can be viewed negatively by future lenders as it indicates that you may be struggling financially. This may not show the full story as you may be on a 0% promotional rate and may have chosen to make a savvy investment rather than paying off the credit card.

You are absolutely correct - but there's also a promotional rate marker on your credit report.

This was placed here specifically to ensure that those people who use cards in this way are not disadvantaged, i.e. 'Minimum payments = Yes, and Promotional Rate = No' is bad, anything else is ok.