Advice on closing my only credit card?

thermalmeltdown

Hi all. This is my first post to the forum, it's been great reading all the useful posts in the past, but for once I need to ask for some advice.
Back in 2014 I opened a TSB credit card, and ever since it's been a useful safety net for those times where unexpected big purchases were necessary. This month I'll be paying off my balance in full, and hope to leave it as close to £0 in future.
This is my one and only credit card, but to be honest I prefer knowing I'm saving money and buying things outright. The limit is £4750. I'd really like to just close the card completely, but I'm not sure if this would have a negative affect on my credit rating? I've seen similar posts but most of them have more than one card, and the affect would be due to credit utilisation if there was a balance on any of the other cards.

Can anyone offer any advice on whether closing the card completely would have a negative impact on my credit score?

Thanks,
tm

[Deleted User]

You don't have a credit score. But you do have credit history.

Regular use of a card is the easiest and cheapest way of building good history, should you want credit in the future.

It's also cheaper than paying cash, with interest free periods, cashback and so on.

Shakin_Steve

Keep it active, you never know what's round the corner. Spend a couple of hundred on it each month and pay it in full each month.

MallyGirl

if you ever want to book a hotel or hire a car then having a credit card is pretty useful. I would keep it and use it regularly with a DD setup to pay off in full each month

System

Having a credit card is a useful tool due to the interest free period and chargeback/S75 protection.

Why not keep it for a specific purpose e.g. petrol/train travel and pay off every month?
It's then there if you need it for a flight or something else.

quackers82

I say keep it open, as others have said you never know whats round the corner and can be a useful buffer. Just put your fuel or food bill on it every month and pay it off in full.

Imagine you go on holiday, you have saved up for it, and you have saved up your spending money. You then go on holiday, have a great time, spend most of your money, you get to the airport to go home only to find your Airline has gone bankrupt you now need new flight tickets and also a hotel for 2 nights while you wait for a new flight! How will this surprise get paid? Credit card!

Life does not always go to plan.

Yawn

Sadly, in this world, those who can get cheap credit generally don't need it, and those who need it can't get it. With that in mind it is good to keep your card open, just in case.

If it makes you feel better, you could also reduce the limit to a 1,000 or 2,000 pounds?

Ebe_Scrooge

thermalmeltdown wrote: »

and hope to leave it as close to £0 in future.

Use the card for everyday spending ( food, petrol, etc. ), and make sure to repay in full every month ( setting up a Direct Debit for the full amount is the safest way ). Not "as close to £0", but "£0".

This way, you pay zero interest, and increase your credit history.

A credit card is really useful for things like car hire, hotel bookings etc. The key point is, don't look upon it as "free money". Don't be tempted to spend what you can't afford. Use it for stuff you'd have to buy anyway, pay off in full every month without fail.

And, as has already been mentioned, you get Section 75 protection. If you want/need to buy something between £100 and £30,000 (http://www.moneysavingexpert.com/shopping/section75-protect-your-purchases), buy on your credit card. If the company goes bust, fails to deliver, whatever, you've got no worries, the CC company will refund you.

To answer your original question - closing the card will have little effect upon your credit rating ( although, arguably, the fact that a mainstream lender is prepared to offer you credit is a good sign in the eyes of future lenders ). But a credit card, used sensibly, is a very useful tool. I'd keep it, use it regularly, pay in full each month. Nothing lost, and it can only look good on your credit history, should you find yourself needing to apply for any form of credit in the future.

System

I have closed my only credit card , it does show as a negative that i don't have an active card but it really doesn't bother me , i am far happier without it.

Missus_Hyde

Why not keep it anyway? It's not obligatory to spend money on it and as long as it's not costing you anything, you might just as well keep it.

We have a selection of credit cards, most of which we barely use; some, like the Clarity, are useful abroad and others are back ups. I do like them for items which are not readily available like furniture, so there is some sort of comeback if the item doesn't arrive/ is faulty etc.

I usually put the odd item on the lesser used ones, just to keep them ticking over, in case we do need them for any reason.