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Barclaycard reducing credit limit then closing account due to inactivity

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jet01jet01 Forumite
36 posts
10 Posts
I have received a letter today from barclaycard to say that because I haven’t used my card for a while they will cut my credit limit from over £9,000 to £1,000 from July and then in August they will close the account altogether. If I want to keep the card at the existing credit limit I can text them or make a purchase on the card in the next 14 days and nothing will change. 

I have been thinking about getting rid of this card for a while as I have another rewards card that I prefer to use instead. However, this card is the longest standing financial relationship I’ve had with any lender because I have had the card since 1997 and kept it in good standing. Therefore for that reason I’m unsure if I should close it or not because I have read that it is good for your credit report to have some long-standing products that you have maintained well over time. Is this true or should I go ahead and close the account?

Also I found it a bit strange that the letter says that they will cut the credit limit for a month before they actually close the account. Any ideas why this would be? I’m worried that will look like they have cut the credit limit because they think I’m a bad risk and then I closed the account in response to that credit limit cut, reducing the likelihood I will be accepted by or get the best deals from another card company if want another card in the near future. Is that right?

Any advice appreciated. 
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Replies

  • DobbibillDobbibill Forumite, Board Guide
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    How long have you had the card you prefer using?
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  • jet01jet01 Forumite
    36 posts
    10 Posts
    Since 2015. It’s from Nationwide. Also a third card with Halifax I have had since 2012 but don’t use either. 
  • jet01jet01 Forumite
    36 posts
    10 Posts
    I should maybe have also mentioned in the original post that the letter from barclaycard also gave me the option to text them to close the account straightaway before the interim credit limit kicks in. 
  • Fighter1986Fighter1986 Forumite
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    Your other accounts will be considered "old" as it were too, their presence on your credit file will keep you in good standing creditworthiness wise.

    If I were in your position I'd close the Barclaycard right away before they reduce your limit. 

    You can always come back to Barclaycard as a new customer once your old account is closed. 

    Or you could use this opportunity to open a new, better card elsewhere? Earn some rewards or cashback on purchases? Considered American Express? 
  • SnowTigerSnowTiger Forumite
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    jet01 said:
    Also I found it a bit strange that the letter says that they will cut the credit limit for a month before they actually close the account. Any ideas why this would be? I’m worried that will look like they have cut the credit limit because they think I’m a bad risk and then I closed the account in response to that credit limit cut, reducing the likelihood I will be accepted by or get the best deals from another card company if want another card in the near future. Is that right?

    Any advice appreciated. 

    According to my Barclaycard T&C they have to give me two months' notice before they chose my account, unless it's for a specific reason: 

    Unless we are closing your account for one of the reasons below, we’ll give you at least two months’ written notice. We may close your account and require immediate repayment of your total outstanding balance for the reasons below:

    • If we reasonably believe that you’ve broken this agreement regularly or seriously
    • If you have acted fraudulently
    • If the Home Office tells us that you have become a ‘disqualified person’ due to your immigration status
    • If you become bankrupt (or enter into a voluntary arrangement with your creditors) or if we believe this is likely to happen
    • If you die (in this case, we may ask your estate to make the repayment)

    Usually Barclaycard has to give one month's notice for other changes, such as a credit limit change, unless they have negative information that allows them to act sooner.

    Barclaycard isn't reducing your credit limit or closing you account because of negative information.  It's doing so based on the fact you don't use your account/card.  If Barclaycard thought you were a bad credit risk they would cut your limit and/or closed your account before informing you.

    Reducing your credit limit and closing your account has two different time scales: one month's notice to change your credit limit; two months' notice to close your account.
  • CatsacorCatsacor Forumite
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    I have had the same situation with 2 cards in the last few months, they were old balance transfer cards that weren't used much really so i just let them do their 'thing'.
    Longstanding relationships don't count for much in the business and banking world, any more, so if you're a reliable customer of other banks etc then let it be, your overall conduct regarding credit/data will still be visible for further/future lenders to make judgements on.
    First, take responsibility .....
  • MalkytheheedMalkytheheed Forumite
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     I'd close the Barclaycard right away before they reduce your limit. 

    Why? What help does this give? I don't see the advantage? 
    I don't mean to have a go but are you really in the best knowledge to give advice? I noticed in your previous post you told a commentor that you had to get a money transfer card from a specific lender to be able to buy a car on a credit card, which simple isn't true. 
  • steffanglsteffangl Forumite
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    The limit will be visible on the credit file for 6 years - I would think it's better to settle the account with a 9k limit rather than 1k.
    Barclaycard do have their reward card I'm sure they'd switch your current product to if you wanted, but the reward is only 0.25% - you'd get more with Amex, depending on spend.
  • edited 20 June at 9:36AM
    Fighter1986Fighter1986 Forumite
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    edited 20 June at 9:36AM
     I'd close the Barclaycard right away before they reduce your limit. 

    Why? What help does this give? I don't see the advantage? 
    I don't mean to have a go but are you really in the best knowledge to give advice? I noticed in your previous post you told a commentor that you had to get a money transfer card from a specific lender to be able to buy a car on a credit card, which simple isn't true. 
    There are only three lenders that offer money transfer cards - Virgin Money tesco and MBNA. Out of those, MBNA are the only one that allow you to request a specific limit.

    So on that basis my advice was sound.

    The advantage of closing the account before the limit reduction take place is such that other creditors when credit checking the customer will see their Barclaycard had a high limit, not a low limit, which could influence their decision in terms of what limit to extend them on their new account. Being seen to be trusted with £9,000 is obviously better than being seen to be trusted with £1,000. 

    Anything else?
  • OneTrueScotsmanOneTrueScotsman Forumite
    11 posts
    First Post
    How long has it been since you used the card?
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