Paying off -> reducing credit limit

jkerm

Is it a good idea to reduce credit limit on cards as they're paid off? I have a BT card that I'm paying off and the credit limit is +£1000 too much so I was thinking reducing it by maybe £500?

Willing2Learn

No, it is not a good idea. It might look as though you cannot afford the credit. Better to use the card for your normal monthly budget expenses and then [STRIKE]pay off the balance in full[/STRIKE] pay off as much as you can each month after the statement is received and before the due date.

Unless you have difficulty with sticking to a monthly budget, I would keep your credit limit as it is now.

jkerm

Willing2Learn wrote: »

No, it is not a good idea.

So wait until the whole thing is paid then close it?

[Deleted User]

No keep it open and use it for normal spendings and pay off each month after getting the statement

PRAISETHESUN

The answer to this question will mostly depend on why you want the limits lowered.

Having a lower limit will adversely affect your credit file as the utilisation of your cards is higher (eg. £500 of a £2000 limit is 25%, vs 50% of a £1000 limit). If you are paying off a BT then I don't see any reason to lower the limit of your card as you pay it off, unless you are worried about spending big again and racking up more debt.

If you have the self control to stick to your budget and only spend what you need to, then by all means keep the limits as they are. If you are struggling, then I'd probably suggest closing the card once it has been paid off.