Planning to close Amex - Need advice

mumofmini

Hi all, I do have an Amex Platinum card that I've been using since 2013.. Been using it responsibly and they recently offered me a limit increase to £16k (was £14k). I have declined this offer and am now planning to actually pay off the remaining balance and close the card..  One of the reasons for deciding to close is, they have few month ago increased the interest rate to 22%, which I felt is unfair as my credit rating would have improved but is not reflecting in what Amex is offering me. I have another credit card from M&S bank that I hardly ever used and I dont see why I need it ! I will keep that and thinking it will be easier to manage finances with just 1 credit card (and paying off in full every month). 
Q's are: 
1) Am I doing anything wrong with closing off the Amex platinum card? - Should I ask them to move me to another card that does not have yearly fee and possibly lower interest rate?
2) Will it (cosing the cc) adversely affect my credit score?
3) Are there any cards from Amex that do not charge yearly fee?

Thank you all in advance

blue.peter

1. It's probably a good idea to have at least two credit cards, in case one has a system failure. A backup is a good idea. If it was me, I'd be inclined to pay it off but still keep it active. (Making a small occasional purchase and paying it off in full when the statement comes should achieve this.)

2. Your credit score is irrelevant: it's your credit history that matters. Having said that, a low credit utilisation (i.e., a low usage: limit ratio) is often reckoned to be a good thing. Again, keeping the second card open but little used helps this.

3. Yes. I have a Platinum Cashback Everyday Credit Card. I don't pay any fee for it. There might be others, but I don't know and haven't scoured AmEx's web site looking for them.

D3xt3r5L4b

Interest should be irrelevant if you’re clearing the balance in full each month. 

ratechaser

Plus the whole point of having an Amex platinum CC (as opposed to the charge card) is for the cashback, which means you need to be paying it off in full each month!

Paully28

There are quite a few AmEx cards that don't charge a fee, have a look on their website. 
Also, I would suggest that you always have more than one type of card in case of decline, or the shop you are in doesn't accept one type of card.

jbrassy

When you say you have been using it responsibly, does this mean you have been paying off the balance in full every month? If so, the interest rate is irrelevant since you won't be paying any interest. If you're not paying the balance off in full every month, the Amex card really isn't suitable to your needs. You'd be better of with a 0% interest card. 

In terms of Amex raising your credit limit, this is a good thing in terms of your creditworthiness. If you have a higher limit and pay the balance off in full every month, this demonstrates that you are responsible with credit. The credit score that Experian, Equifax, et al provide you with is largely meaningless and lenders don't see it. What they do see is whether you've paid off your balance in full and on time, so it's important you do that rather than worry about your credit score.

As for closing the Amex card, I would have thought Amex would pay a better rate of cashback compared to M&S? In any case, you could switch to the Amex Everyday Platinum Cashback card which has no annual fee and pays 0.5% cashback on the first £5,000 of spending and 1% above that. 

mumofmini

Thank you all for your inputs. I have decided to keep the card and will continue to pay off every month. Will also keep M&S as backup.

ratechaser

mumofmini said:

Thank you all for your inputs. I have decided to keep the card and will continue to pay off every month. Will also keep M&S as backup.

And that's the best approach if you are able to do so. That cashback can add up nicely as long as it's not eaten up by interest charges.