What to do with my credit cards?

mjkk77

Hi all,

A few years ago I have racked up around £12k in credit card debt. What a mistake it was. Long story short, I am on a final stretch of repaying it.

I have 4 credit cards:
HSBC £12k limit with no debt (used for monthly shopping, always fully paid off before the new statement, keeping it open as "just in case").
Virgin Money £5k limit no debt (just cleared it, it was my 1st balance transfer card).
MBNA £6k limit with £2.5 in debt (2nd balance transfer card, promotional 0% rate still in place for another 20 months).
Lloyds £2.5k limit with £900 in debt (0% purchase card, just used it to get the car insurance).

Is there any point for me to keep a "dead" Virgin Money card? Every now and then VM sends me another "offer" of a balance transfer, but I just don't see myself using it.

Will my credit score takes a hit if I decide to close the VM? I assume my short-term borrowing power will go down by £5k and therefore there will be a decrease in credit score?

cymruchris

First - well done on getting things back under control, and heading in the right direction. If you can absolutely trust yourself that you won't go off spending willy-nilly over again, I would keep all four cards, use them all regularly for your regular purchases, and then  have them all pay off in full by DD. Then moving forwards, the good financial management of these accounts will add to your positive credit history - that's what's important - not your score.

Your score is ONLY seen by you, and is a marketing gimmick that in some cases gives a general indication of your creditworthiness, but that's about it, and can be wildly inaccurate. If you make any change to your credit accounts - the score will likely move - and most often or not - downwards, and then creep back up over several months of you not doing anything. Forget about the CRA scores and borrowing power - nobody uses them to decide whether or not to give you credit, it's your history they look at, and that helps them decide if you're a good risk.

Brie

If everything was ticking along ok then I would suggest ditching the VM card if for no other reason than to remove temptation.  (my non finance savvy OH thinks an unused card = savings waiting to be spent!)

Then as your 0% deals approach their end you can check that you've paid them off properly and if things are tight will have the option of applying for something new with a good joining promo.  

Ebe_Scrooge

Firstly, as has already been pointed out, ignore your score - it's not used nor even seen by any future lender.

Secondly, it's usually good to keep cards open, so long as you can trust yourself not to use them for things you can't afford.  Use them every couple of months or so for a small purchase, and pay off in full, just to keep them active.  Long-running lines of credit are a positive on your credit history.  And if you close a card, it can be misinterpreted that the bank closed the account due to misconduct or something, rather than you voluntarily closing it.

Thirdly, the HSBC card, you say "always fully paid off before the new statement".  Paying off in full is unquestionably the right thing to do, no two ways about it.  But wait until the statement arrives, then pay it in full.  If you clear it before the statement is produced, it looks like you're not using the card.  Nothing wrong with that as such, but you're losing the benefit of building up a solid history of responsible borrowing and repayment.

mjkk77

Thank you all for your help! Looks like I am keeping a VM card after all!