Paying off CCs / company reducing limit

briankelleher

I have credit cards with Capital One (2 x £500), Barclays (£750) and Natwest (£1500). Two years ago, I paid off £250 on my Barclaycard, and they immediately reduced my limit from £1000 to £750. I want to pay off some of my cards, but I also want to retain my credit for emergencies. Are all of the above lenders equally likely to reduce my limit once paid? I think it goes without saying that I have poor credit, if that helps.

grumbler

Does this really matter? You want to pay the balance off regardless. It makes no sense to keep paying high APR on some £1000 that you need for emergencies.

Start with the highers APR and see. When you pay everything off and they cut the limit you can either ask them to increase it or try applying for another card and close the old one.

Paul_Herring

grumbler wrote: »

It makes no sense to keep paying high APR on some £1000 that you need for emergencies.

If there's a nil balance on the card, then there will be no interest to pay.

And if the emergency money is paid off in full on the next statement, there still won't be any interest to pay.

briankelleher

Paul_Herring wrote: »

If there's a nil balance on the card, then there will be no interest to pay.

And if the emergency money is paid off in full on the next statement, there still won't be any interest to pay.

Exactly. Plus emergencies happen, especially for two people who live 500 / 4500 miles from their aging families. I'm happy to reduce the credit limits once I know I have a decent sum available for emergency travel etc, but I don't want to, for example, pay £500 to Barclays only to have them lower my credit limit by £500, and then have an emergency and I can't afford. Obviously the other option is to save for these emergencies, but it's a bit stupid to have savings when I have debts.

grumbler

Paul_Herring wrote: »

If there's a nil balance on the card, then there will be no interest to pay.

And if the emergency money is paid off in full on the next statement, there still won't be any interest to pay.

I might be misunderstanding something, but ATM there is a balance on the card and the OP has doubts about paying it off because the credit limit can be reduced in this case.
ATM the OP has, say, £500 balance and can pay it off, but is considering to keep £500 'under the mattress' for emergencies while keeping paying the interest on the CC balance. Correct?

Paul_Herring

grumbler wrote: »

I might be misunderstanding something, but ATM there is a balance on the card and the OP has doubts about paying it off because the credit limit can be reduced in this case.
ATM the OP has, say, £500 balance and can pay it off, but is considering to keep £500 'under the mattress' for emergencies while keeping the paying interest on the CC balance. Correct?

I presumed that the 'for emergencies' card would be one where it had been paid off.

But you are correct - if there is a balance on there, then the second of my statements won't hold true, since the card won't have been paid off.

But interest will only be charged on the balance outstanding (£500), not on the credit limit (£1000)

grumbler

Paul_Herring wrote: »

...But interest will only be charged on the balance outstanding (£500), not on the credit limit (£1000)

OK

• Scenario 1: £1000 limit, £500 balance, £500 'under mattress'
• Scenario 2: £500 limit, £0 balance, nothing 'under mattress'

Yes, in the second case the OP has £500 more for emergencies, but at what cost?

briankelleher

briankelleher wrote: »

Obviously the other option is to save for these emergencies, but it's a bit stupid to have savings when I have debts.

grumbler wrote: »

I might be misunderstanding something, but ATM there is a balance on the card and the OP has doubts about paying it off because the credit limit can be reduced in this case.
ATM the OP has, say, £500 balance and can pay it off, but is considering to keep £500 'under the mattress' for emergencies while keeping paying the interest on the CC balance. Correct?

Please read OP's replies before replying as if I'm not part of the conversation.

I'm not considering not paying, I'm trying to find out if there's one of the above that is least likely to reduce my limit when I've paid some off. If they are all likely to reduce, I can factor this in. I'm just asking for advice, but you're ignoring me and it's very frustrating.

Also:

grumbler wrote: »

OK

• Scenario 1: £1000 limit, £500 balance, £500 'under mattress'
• Scenario 2: £500 limit, £0 balance, nothing 'under mattress'

These are not the same thing. in scenario 1, it would be £500 limit, £500 balance, £500 under the mattress (which I've already said I don't want to do). And "at what cost" is about £12 a month, which I'm fine with if it means I can make it to my father's funeral when he passes away. Again, please read my posts before giving unwanted and unnecessary "advice".

Paul_Herring

briankelleher wrote: »

I'm trying to find out if there's one of the above that is least likely to reduce my limit when I've paid some off. If they are all likely to reduce, I can factor this in. I'm just asking for advice, but you're ignoring me and it's very frustrating.

No-one's answering that particular question because no-one knows.

bengal-stripe

briankelleher wrote: »

Are all of the above lenders equally likely to reduce my limit once paid? I think it goes without saying that I have poor credit, if that helps.

Yes, there is always the possibility, once the borrowing has come down, the lender will reduce your limit as the bank has lost faith in you as a borrower.

Whether or not this will happen, depends on the way the account has been kept (by you).

JakeGreen

bengal-stripe wrote: »

Yes, there is always the possibility, once the borrowing has come down, the lender will reduce your limit as the bank has lost faith in you as a borrower.

Whether or not this will happen, depends on the way the account has been kept (by you).

If you've never missed a payment would they lose faith in you as a borrower?

I would have thought that carrying a high balance and paying interest on it would make you a profitable customer? Once you've paid it off in full if anything they should increase your limit in the hope that you'll do it again with a higher balance than before?

Do people often have their limits reduced after carrying a high balance and paying interest on it?