Closing Cards - Advice

MrDebtWarrior

Hi, I recently opened a new Tesco credit card, I opened it to take advantage of the clubcard points gained through spending.

I've now seen Asda's card and as I use Asda more for Shopping and Petrol, it makes sense for me to use this card as a debit card replacement. (Don't know why I thought the Tesco one was a good idea, was drawn in by the 4x clubcard point transfer:o)

At the moment I have 3 cards;

Halifax - held for about 10 years - £0 balance, £8,000 limit
Tesco - recently opened - £0 balance, £2,400 limit
Asda - New card - £0 balance, £3,000 limit

I have one loan, remaining balance is around £6,500 with 21 payments to make (Should be paid off earlier as I have saved £600 along with paying this so will be making overpayments).

I've only had one late payment in the last 10 years, due to an error on my part - paid balance online and did not realise it would take 3 days to process. This was 4+ years ago.

Current salary is £20k.

I've never considered closing my Halifax one,I have had the account since I was a kid, changing it as I grew older and now I have the Ultimate Reward account, with credit card and the loan is also through Halifax.

I know that a lot of available credit can be seen as a bad thing, so my questions are;

Should I close my Halifax card? Or ask for a reduced limit? - I'll never use this card unless it was an extreme emergency so not really any point keeping it other than due to the length of time I've held it.

Does holding a card for a long period help your rating?

I will be closing the Tesco card - will this harm me due to opening and closing so quickly? Might sound silly but I don't want to be seen as a timewaster.

I will be using the Asda card for every bit of my spending to get the 1% cashback in Asda/Petrol and 0.5% everywhere else, I will be paying in full each month through Direct Debit.

Finally, for my salary & loan amount, any ideas on what a good level of available credit is?

If you need any further info please let me know. Thank you. K

[Deleted User]

Since your other cards are new I'd keep the Halifax open but you could lower the limit to reduce your exposure to revolving credit. I'd recommend using the Halifax card once or twice a month and paying off in full to keep the account active and avoid a dormancy charge. Having a long standing, well run account is likely to make you seem more stable.

Tesco might ask why you're closing it but it shouldn't have any negative effect to do so - just tell them that you've reconsidered.

There is no hard and fast rule when it comes to income/limits however you have to look at things from a prospective lender's point of view. Although you say you will only use the cards in an emergency, there is nothing to stop you going out and getting into £13,400 of debt tomorrow. That, with your loan, means that you'd owe a years salary.

Scrounger

Kevvlar wrote: »

Hi, I recently opened a new Tesco credit card, I opened it to take advantage of the clubcard points...

Its not too late to claim 1000 free Clubcard points straightaway on your new Tesco card, see here:

http://www.tescobank.com/assets/sections/credit-cards/pdf/tesco-credit-cards-recommend-friend.pdf

[You claim the free points once you have received the card - if you need a referrer just PM me]

Scrounger

guesswho2000

Lazyloki wrote: »

Since your other cards are new I'd keep the Halifax open but you could lower the limit to reduce your exposure to revolving credit. I'd recommend using the Halifax card once or twice a month and paying off in full to keep the account active and avoid a dormancy charge. Having a long standing, well run account is likely to make you seem more stable.

Tesco might ask why you're closing it but it shouldn't have any negative effect to do so - just tell them that you've reconsidered.

There is no hard and fast rule when it comes to income/limits however you have to look at things from a prospective lender's point of view. Although you say you will only use the cards in an emergency, there is nothing to stop you going out and getting into £13,400 of debt tomorrow. That, with your loan, means that you'd owe a years salary.

I'm on the other side of the fence - don't reduce the limit on your Halifax. Just leave it as is.

My experience is that, like many others, but unlike a similar number, limit to income (88%, 102% including overdraft limits) doesn't seem to matter.

I'd say that debt to income and debt to limit are the two big factors. I've also read (though not experienced, and not sure how much I believe it) that a limit reduction can be viewed negatively. I assume this would only be the case if said limit reduction made your debt to limit (utilisation) percentage look high.

I'd also recommend keeping the Tesco card if you ever buy petrol there. Double clubcard points if you use the CC as a clubcard, even if you pay with something else.

The_Boss

^ what guesswho2000 said

MrDebtWarrior

Thank you for the replies.

I will leave the Halifax card as it is.

I have decided to close the Tesco card as I have no real need for it after being accepted for the Asda one).

matttye

guesswho2000 wrote: »

I'm on the other side of the fence - don't reduce the limit on your Halifax. Just leave it as is.

My experience is that, like many others, but unlike a similar number, limit to income (88%, 102% including overdraft limits) doesn't seem to matter.

I'd say that debt to income and debt to limit are the two big factors. I've also read (though not experienced, and not sure how much I believe it) that a limit reduction can be viewed negatively. I assume this would only be the case if said limit reduction made your debt to limit (utilisation) percentage look high.

I'd also recommend keeping the Tesco card if you ever buy petrol there. Double clubcard points if you use the CC as a clubcard, even if you pay with something else.

Logically it would seem to me that limit to salary would be another big concern for lenders.

If I earn £40k a year and already have £40k credit available, lenders would surely be cautious about lending me more, even if I'm not using any of that credit. Like someone else said earlier, you could easily go out and blow the lot tomorrow.

fozmcfc

I've been using cards for a few years now just for the 0% spending periods, once it runs out, I generally haven't been using the card again.

Tesco didn't re-issue my card late last year and because of non use, Halifax have just sent a letter to say they won't be re-issuing me with a card either.

There are many who say, it can be a bad thing, having too much credit compared to your annual income. But so far in my experience, it hasn't stopped me getting further credit, despite the fact I've had over 90% of my annual income available in credit.

I think if you have a long unblemished credit record, including one or two very long used accounts, it doesn't matter.

bouncydog1

If you Tavel overseas you might want to ask Halifax if they will convert your card to a Clarity which will give you excellent fx rates for spending and cash withdrawals.

Ilona

I use my Tesco credit card for anything anywhere. Use it in Asda, Morrisons, Sainsburys, for food and petrol. Get all the points.
Ilona