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Accepted for prime CC - cancel subprime ones or keep all 3

KateLndn
Posts: 86 Forumite

in Credit cards
Hello,
I have been on a debt free journey for the last few years and have managed to pay off all my debts and now have 1 settled default on my credit file which will drop off in December.
I have an overdraft (£1000) and 2 sub-prime CC's with Aqua (£700 limit) and Capital one (£200 limit). However, I popped into my HSBC last week to discuss my account and was told I was eligible for for a CC with them so I accepted. The APR is much lower and was offered a limit of £1500 which is more than the two sub-primes combined. I was also offered 9 months 0% interest on purchases and 34 months % on balance transfers with a 3.3% charge for each one.
Could anyone advise me what I should do now that I have 3 credit cards. Should I close the sub-prime ones and keep the HSBC one. Or is it better to have at least two and close one of them? I have balances on both which has to be done in 60 days. Should I transfer the balances and keep all three? I am also wondering if it will have a bad effect on my rating if I have 3 credit cards? I always pay at least the minimum by direct debit and pay off as much as can can which sometimes leaves a small amount left over each month.
Any advice would be greatly received as I am hoping to get a mortgage next year so want to make sensible choices to get my credit file looking as best it can.
Thank you in advance
I have been on a debt free journey for the last few years and have managed to pay off all my debts and now have 1 settled default on my credit file which will drop off in December.
I have an overdraft (£1000) and 2 sub-prime CC's with Aqua (£700 limit) and Capital one (£200 limit). However, I popped into my HSBC last week to discuss my account and was told I was eligible for for a CC with them so I accepted. The APR is much lower and was offered a limit of £1500 which is more than the two sub-primes combined. I was also offered 9 months 0% interest on purchases and 34 months % on balance transfers with a 3.3% charge for each one.
Could anyone advise me what I should do now that I have 3 credit cards. Should I close the sub-prime ones and keep the HSBC one. Or is it better to have at least two and close one of them? I have balances on both which has to be done in 60 days. Should I transfer the balances and keep all three? I am also wondering if it will have a bad effect on my rating if I have 3 credit cards? I always pay at least the minimum by direct debit and pay off as much as can can which sometimes leaves a small amount left over each month.
Any advice would be greatly received as I am hoping to get a mortgage next year so want to make sensible choices to get my credit file looking as best it can.
Thank you in advance

September 2022: £100 Zoflora BundleAugust 2022: 51st State VIP tickets July 2022: White Claw bundle June 2022: 2 tickets to the World BBoy Championships April 2017: Hotel Chocolat, family ticket to Molly monster premiereMay 2017: Dole smoothie trial.
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Comments
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Clear them ASAP (with a BT if necessary) and keep at least two in total. Always good to have a back up.0
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keep the sub prime you have held longest, BT all balances off both and make sure you pay all purchases off before the end of the 9 month 0% deal. It is generally best to not mix 0% purchases and BTs but in 8 months time you would be in a better position (provided you have kept everything up to date) to get a separate 0% purchases card and just leave the one with the remaining BT at home so you aren't tempted to use it.I’m a Senior Forum Ambassador and I support the Forum Team on the Pensions, Annuities & Retirement Planning, Loans
& Credit Cards boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com.
All views are my own and not the official line of MoneySavingExpert.0 -
I'm also applying for a mortgage next year, here's what I would do.
1) Reduce the overdraft.
You don't need a £1000 overdraft because if you want a mortgage you shouldn't be using it. My overdraft is £50 on each account and OHs is £150 but none are ever used.
2) Don't close either Aqua or Capital One.
Two reasons for that a) presumably you've had them a few years and so they are making your average account age older which is a plus.
You've been (presumably) only paying the minimum off for a while and maybe even have late markers from 4-5 years ago? If you close the cards now that info will stay on your file 6 years from date of closure. If you keep the cards open and use them well, the bad history will disappear 6 years after it happened which would be a lot sooner.
3) I would use the subprime cards for normal spends and pay them off in full each month.
Eg spend petrol on aqua and groceries on capital one and pay off in full when statement arrives. You don't get charged interest if you pay off in full and it will be a positive factor in your credit report, it will show you can be trusted to borrow and pay back in full.
Another plus is it will keep your day to day spending and the BT amount now on the HSBC card that you have to pay back separate. It could be tempting to use the 0% purchases on the HSBC card but any debt you have remaining at time of mortgage will count against you and if your credit history is full of minimum repayments you probably won't be offered the best mortgage rates.0 -
Thanks for this amazing advice. I had no idea about not using a card for both BT and purchases. But will surely take all your points into consideration and clear the balances the quickest and cheapest way possible. I always pay more than the minimum but was previously only because I didn't like the idea of a mounting balance. Will make sure I always pay more each month in the hope of getting the best mortgage.
Lplatsaver: At the moment I work part time so need the overdraft I'm hoping to apply for the mortgage around this time next year, how long prior to the application do you think I should reduce the overdraft? Good luck with your application too!September 2022: £100 Zoflora BundleAugust 2022: 51st State VIP tickets July 2022: White Claw bundle June 2022: 2 tickets to the World BBoy Championships April 2017: Hotel Chocolat, family ticket to Molly monster premiereMay 2017: Dole smoothie trial.0 -
Lplatsaver: At the moment I work part time so need the overdraft I'm hoping to apply for the mortgage around this time next year, how long prior to the application do you think I should reduce the overdraft? Good luck with your application too!
People on here usually say 6 months. I don't know the answer, like I said all these little things probably won't stop you getting a mortgage but they might limit the amount you can borrow or increase the rate you have to pay or both. Anyway I think closing the cards would be the wrong decision, especially if you're using an overdraft spending £30 etc on aqua and paying it off in full may make a lot of difference to your credit history.0 -
I really do want to do as much as I can so I can get the best deal possible. I plan to go full time in a few months which will mean I can reduce my reliance on credit and get a better mortgage. I will have a look in the mortgage section of the forum to get up to speed. Thanks.September 2022: £100 Zoflora BundleAugust 2022: 51st State VIP tickets July 2022: White Claw bundle June 2022: 2 tickets to the World BBoy Championships April 2017: Hotel Chocolat, family ticket to Molly monster premiereMay 2017: Dole smoothie trial.0
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If you do keep the sub-prime cards make sure that they are getting some use or it stands a good chance that they will be cancelled (once they have a nil balance). The fact that they are reasonably long standing accounts and are in good order will probably count for more than the prime card that you have only held for a short period.0
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