What to do ? CC options

Dragon1981

Hi All

I have been reading here with intent for quite some time and unknown to you until now, have been helped greatly. through being a bit more frugal and also moving balances around, I have got my Credit card Debt down to £10,500 where it once was £26000. I have within the last 6 months paid off in full and closed 4 credit cards.

I currently have the following credit cards.

Virgin Money : £8150 balance of £9700 limit - 0% until April 2022
Halifax : £2300 balance of £3500 limit - 0% until September 2020
HSBC : £0 balance of £3600 limit
Barclaycard :£0 balance of £7700 limit

I only recently took out the virgin Credit card and transferred the remaining balances from HSBC and Barclaycard to it in order avoid interest.

I earn c£40,000 and although i did run up quite a bit of CC debt ( shamefully) , i have hopefully addressed this and am quickly working my way through what remains. I have no other debt aside from a mortgage and a £1000 interest free furniture loan.

My question is, should i close one of the accounts with zero balance? i do trust myself not to spend on them ( have chopped up cards in any case) but having closed numerous accounts relatively recently will this affect my credit worthiness? Would it be better to keep them open for debt to available debt ratio and to keep the average age of account in 3 figures? ( both held for around 15 years whereas the current two with balances are 5 years old and one month old). Or would it be better to close the accounts?

Working to my current allocation of funds I will have paid off the Halifax Card by September and the Virgin card by October 2021. I will be putting close to £500 per month combined towards these cards until paid off. This means incurring no interest so long as i dont spend on them. ( rate for BT only)

I will be looking to take out a loan of around £4-5k when my car dies - i dont imagine it being cost effective to keep at next MOT in June and want to be in the best credit place possible then.

in case it is matters ( and i know scores are only good to the credit agencies) my credit worthiness rating i believe to be excellent given not so much as a missed payment in over 20 years of credit. I know the high debt i had needed to be lessened and i know the debt i still have also needs to be also.

thanks for reading and i hope you're able to advise me well as you have with so many and that i have the wisdom to take that advice.

Dragon

[Deleted User]

I'd keep them.

You only have four cards and the limits aren't particularly high, especially as two of them are carrying balances.

You'll also want to use at least one of the remaining two on a regular basis.

Dragon1981

Thanks ZX81 - sound advice i'm sure.

can i ask why i would need to use 1 of the 2 on a regular basis?

[Deleted User]

To maintain regular repayment history and avoiding looking like you only use credit to carry a balance.

Just use and clear in full each month. It also helps with cashflow, earns you a bit of interest and with the right card, could give other benefits.

Dragon1981

Thanks.

Just to be clear ( as I’m probably reading it wrong and am slightly confused) - use the cards with Zero balance monthly or the cards with money owing on them?

[Deleted User]

Zero balance.

If you use the others, you'll pay interest on your purchases.

Dragon1981

Great thanks.

I’ll pay a few big shops early in month then transfer cash at the end of month.

Ben8282

Dragon1981 wrote: »

Great thanks.

I’ll pay a few big shops early in month then transfer cash at the end of month.

No don't do this unless you actually want to.
If you do 'big shops' you have to pay for the goods somehow. If you close all your credit card accounts with 0 balances you will then either have to use a credit card with a balance and pay interest on your purchases OR use cash or a debit card which in my opinion would be foolish when you could be using credit cards to benefit from 56 days interest free credit, keeping money in your current account longer maintaining a healthy balance and/or earning interest etc.
Don't transfer any cash at the end of the month (whatever you mean by that). Instead set up a full balance direct debit on your credit cards with 0 balances, use them for all purchases and let the direct debit be taken in due course.
It's a shame that you don't have any cashback or rewards type cards. What cards did you hold that you closed, which I think was probably a mistake but too late now.

Dragon1981

Full balance direct debit makes more sense than paying the same amount as spent, back to the card (as in transferring money from my bank account) .

The cards I closed were Santander, RBS, Natwest and Nationwide. I paid off the cards with biggest apr first then thought too many cards would hinder my credit worthiness ( too much available credit). I see now this may not have been the case.

Ben8282

Dragon1981 wrote: »

Full balance direct debit makes more sense than paying the same amount as spent, back to the card (as in transferring money from my bank account) .

The cards I closed were Santander, RBS, Natwest and Nationwide. I paid off the cards with biggest apr first then thought too many cards would hinder my credit worthiness ( too much available credit). I see now this may not have been the case.

Your credit limits are all relatively low. My available credit has exceeded annual income for many years and I have no difficulties in obtaining new credit cards.
Having said that though, I can see that six 0 balance cards could have presented difficulties in actually using all of them every month. so perhaps closing them was not a bad idea after all.
I would prefer a smaller number of cards but with higher limits and where possible each card for a purpose ie rewards, no foreign transaction fee etc

Dragon1981

Not that I plan to use the available credit but should I accept credit limit increases on cards when offered? Does it assist in credit worthiness? I’ve always turned this down for that fear of too much credit available looking like “he doesn’t need the credit line so we will turn him down” which as pointed out is a false thought process.