Should I close down my unused credit card?

Charlotte-Jane_2

Hi,

I've recently balance transferred from Barclaycard to Capital One, is it advised that I now close down the Barclaycard account? As i'm aware that multiple open accounts can have a negative affect on your credit score.

Thanks

lisyloo

Too much available credit can stop you getting more.
Unused cards can be stolen or used fraudulently without you noticing.
Dormancy charges could be introduced without you noticing.

If you're confident you don't need it then I tend towards closing it down.

Voyager2002

Another point is that Barclaycard tend to have good balance-transfer offers for new customers: so if you close your account now then after a few months you could benefit as a new customer.

lisyloo

Cheers, Knew I'd mising some things in my list.

20aday

I've also seen a separate thread here on MSE where some people have been given £20/£50 upon leaving which has been credited to their account.

stator

20aday wrote: »

I've also seen a separate thread here on MSE where some people have been given £20/£50 upon leaving which has been credited to their account.

Not actually leaving though! It's bribe to stay.

If you want to keep a credit card for emergencies, maybe your other bank cards don't work due to an IT glitch, then you might consider keeping it but reducing the credit limit to say £250 - £1000, depending on your lifestyle

If you want to avoid spending on the balance transfer card then you might want to keep the old one for S75 purchases. Just a thought

I always keep two credit cards with smallish limits.

Anthorn

Charlotte-Jane wrote: »

Hi,

I've recently balance transferred from Barclaycard to Capital One, is it advised that I now close down the Barclaycard account? As i'm aware that multiple open accounts can have a negative affect on your credit score.

Thanks

Swings and roundabouts: Too much available credit could stop you getting more if the lender thinks you've maxed your credit in relation to your income but not always. Lenders are in competition with each other and if they refused credit to someone who already had the facility they wouldn't make much money (Don't get credit from them, get it from me). On the other hand an account which is closed will become a settled account and will stay on your credit history for 6 years from the settlement date. I think an open account looks better than a settled account even if the account history is greener than green.

Duckyduck

Anthorn wrote: »

I think an open account looks better than a settled account even if the account history is greener than green.

Why would a successfully settled card look bad? I agree it's a bit swings and roundabouts in that some lenders prefer low utilisation while others prefer low available credit. My Experian report highlighted not having any successfully settled accounts as one of the negatives pulling down my (excellent) credit score, so I don't think keeping them open is always the best way.

lisyloo

I agree it's a bit swings and roundabouts in that some lenders prefer low utilisation while others prefer low available credit.

I don't think anyone should put too much store by trying to spceulate on how individual lenders might interpret information.
Fact is that a settled account stays on for 6 years so any good history of credit management is still there.

Anthorn

Duckyduck wrote: »

Why would a successfully settled card look bad? I agree it's a bit swings and roundabouts in that some lenders prefer low utilisation while others prefer low available credit. My Experian report highlighted not having any successfully settled accounts as one of the negatives pulling down my (excellent) credit score, so I don't think keeping them open is always the best way.

Because there is no reason for the settlement and closure on the credit history. It just says "settled". You're actually depending on the lender looking at the account history which isn't always done. Typically a lender will just grab the status while proof in the account history that the account has been kept in good order is skimmed over or even ignored. In contrast an open account which is "up to date" looks better.


Overall, a loan which typically has a finite term looks better settled than does forms of ongoing, rolling credit such as a credit card or a current account overdraft.