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Best plan (for me!) when clearing cards?

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  • JimmyTheWig
    JimmyTheWig Posts: 12,199 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Step 1. Minimise the interest you will pay over the next few months.
    If you're paying them all off, don't worry about trying to transfer balances. Just pay off as much as you can as soon as you can off the highest interest cards (whilst still paying at least the minimum on the others).
    [Spreading the payments out when you can pay it all off is unlikely to help your credit report, but even if it would it wouldn't be worth it if it meant paying more interest.]
    The Capital One card, for example, is costing about £1 a day. If you delay paying it off for a week that will cost you £7.

    Step 2. Make yourself look good to future lenders.
    This is a bit of an art. Different companies look for different things. No-one actually knows what any of them look for exactly.
    But as general rules...
    Having high debts compared to your available credit is bad.
    Having high available credit compared to your income is bad.
    Having low limits on credit cards is bad.

    The first two are common sense. The third, not quite so much.
    Imagine in the pub, three guys want you to lend each of them a fiver. You've only got £10 spare.
    Barman says that he'd happily lend either of the first two a tenner, but would only lend the third guy £2.
    Which two of the three do you think you're most likely to get your fiver back from?

    On the basis that your debts will be paid off, I'd be tempted to say get rid of all bar one card. Keep one with a reasonably high limit - so either the MBNA card or Aqua. If you're confident that you will always pay off in full from now on then the interest rate doesn't matter. If not, then keep MBNA rather than Aqua.
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