Can Credit Card APR go down easily?

DevaVictrix

I don't know how credit limits and interest rates are determined for customers. I'm unsure if I should close a credit card that I don't want/use in hope it will aid an increase in limit and decrease in interest rate on another.  

I've always had a Halifax card... £5500 @ 5.25%. But a few years ago I got into some bother, maxed it out, got a Barclaycard (£2500 @ 17.9%) and maxed that out too. They stayed maxed out for 2 years, during which time the interest rate on the Halifax card went up to 9.8%. I guess because both were maxed out. They have now both been paid off. 

I want to keep as much credit available to me (I'm self employed and the credit cards help with purchasing materials... and in the past a new van!) but I also want to see the interest rate on the Halifax card go down in case I max it out again. I'm tempted to close the Barclaycard then ask Halifax for another 2-3K on that card but I'm worried this will leave me with £2500 less credit. 

Hope this makes sense!

born_again

Interest rates are set by each bank. They will not increase/decrease just because you owe more of less elsewhere.

Willing2Learn

I just wanted to mention that it always a good idea to have a few different credit cards, just in case one of them has an IT meltdown.  On that basis I would keep the Barclaycard (as backup), whilst requesting an increase to my Halifax credit limit...


And interest rates are irrelevant if you pay the statemented balance in full before the due date.

SlovakianGuy

Why not to take a new credit card with 0% on purchases for at least 20 months?

Btw, how would closing one card help you to get better rates or higher limit on the other card which you already have with a different bank? I mean, how would the other bank know that you just closed a card which wasn't issued by them? They would have to run a search on your credit report to see that some account was just closed, but such searches are normally run only during the application for a new card. Am I missing something?

SlovakianGuy

Oh, I almost forgot... I asked Creation about reducing my Asda credit card APR and they said it's not possible. I would have to close the card and apply for a new one. It's my very first card, opened back in 2018 when I had no other credit history than just one current account, so the APR was set high and credit limit relatively low. I don't want to close it just because it's my oldest credit account and it's an 'exclusive card for Asda colleagues' which comes with nice perks. What is p*ssing me off is, that they also refuse to increase the limit on the card. I know Creation is a lame bank, but still... Meanwhile, Nationwide already offered me credit limit increases twice, which I both accepted.

DevaVictrix

OK, thank you. I always thought all organisations that issue credit had tabs on your status. It sound like my interest rate doubled because of changes to business or my performance with Halifax.

I'll sit on the Barclaycard whilst asking Halifax for a higher credit limit. Regardless of the result I'll eventually close the Barclaycard.

Creation... isn't that Very? I know the finance director! He's a relly decent bloke... good at golf too! Better than me! 

[Deleted User]

They do get a monthly feed as you say, so they would know if your credit position has improved (e.g. using less / closing accounts etc). You may be re-priced up or down, but I'd say you're more likely to be re-priced up rather than down (as you've experienced!). 

9.8% is still pretty reasonable. I know Halifax have a lower rate representative card, but I'm not sure there are too many others around that would beat it.

Bear in mind even if you do find a cheaper card to open (a long term low rate one, rather than intro rate card), you will also still be scored and could end up with higher % (depending on the product) or just outright rejected. So I'd keep the two you've got whatever happens, those limits are low unless you're earning less than £10k

SlovakianGuy

Somerset_La_La_La said:

They do get a monthly feed as you say, so they would know if your credit position has improved (e.g. using less / closing accounts etc).

Really?
That means Creation know about my Barclaycard which was opened in July 2019? Creation ran a hard search on my file in April 2018.

SlovakianGuy

DevaVictrix said:

Creation... isn't that Very? I know the finance director! He's a relly decent bloke... good at golf too! Better than me! 

No, I think Very card is issued by CapitalOne.   Creation is former Sygma Bank.

[Deleted User]

SlovakianGuy said:

Somerset_La_La_La said:

They do get a monthly feed as you say, so they would know if your credit position has improved (e.g. using less / closing accounts etc).

Really?
That means Creation know about my Barclaycard which was opened in July 2019? Creation ran a hard search on my file in April 2018.

Yep

Every month lenders will receive a 'feed' from their credit agency (or agencies), this is used for ongoing account management - the idea is that it's supposed to provide early warning of over-indebtedness or missed payments/financial stress etc.

The feed isn't visible to you, but internally the data will be collated. How it's used will depend on the company - e.g. Lloyds Banking Group will give you an 'internal score' which takes the most recent credit data and your account usage into account (if you have a Halifax account, go onto online banking, click overdrafts and then 'Credit Extra', it shows you a customer friendly version of your internal score).

Other companies may take absolutely no action until you miss payments. Miss enough, and they'll start to cut your limit (even if your conduct with them is perfect, they know your conduct elsewhere isn't).

Talking of creation, I did a Data Subject Access Request to them, and they show all through my account notes my score increasing. They didn't provide any breakdown as to what the score means - e.g. I started in the 200s, now I'm in the 300s - but I have no idea if this is out of 500, 1000, 2000 etc! The only way this can improve is through use of the CRA 'feed' and my account conduct (spending/paying on time etc).

Another example of data is NewDay (Aqua) who re-priced me due to "adverse" - but what they haven't factored in is that the adverse was present when I opened the account!!

SlovakianGuy

Somerset_La_La_La

That's very interesting. Thanks

Yes, I have a Halifax account. I wanted to try their Credit Extra about a year ago but it didn't work. It's working now!

The strange thing is, when I do an eligibility check for a credit card on Halifax website, it

says I've been pre-approved and my estimated credit limit is £6800. I just checked Credit Extra now and it says

Estimated credit limit £3,200, You’re likely to be accepted for a credit card.

Credit limit less than a half of that shown on their eligibility checker and also, nothing about being pre-approved. I'm a bit confused now.

Edit:
Credit Extra also says "You’re likely to be accepted for an arranged overdraft."  But I already have an arranged overdraft on that account.