Should I take increase on a high APR card?

rhewitt

Hi all,

I have been improving my credit successfully for the past 2 years after previously having had bad credit

One of my cards is an Aqua Classic, with a high APR (45-50%). I accepted 2-3 increases so far, but have now been offered an increase to £3.3k and am unsure if I should take it.

I know the advice usually given is to take any increase (to reduce credit utilization %), but would be interested to hear any thoughts/advice.

I have applied for other cards, such as tesco foundation card but have been rejected. So for now I am waiting on a lower APR card. Should I take the increase on the Aqua one for now?

[Deleted User]

As long as you trust yourself not to overspend, accept it.  It shows that lenders are starting to trust you a little more.

Ebe_Scrooge

As above, being offered an increase is a good sign, and will reflect positively on your credit history.  But, as ZX81 says, the crucial thing is not to overspend - only ever spend what you can afford to repay.  Just because you've got a higher limit, there's no reason at all you need to use it.  The APR as such is irrelevant as long as you religiously clear the full outstanding balance every month - please tell me that you are doing this????

Once you've got a couple of years of regular usage and full repayment under your belt, you should find yourself in a much better position in terms of getting a "better" card.  Although, like I say, the APR is irrelevant so long as you're repaying in full every month.  But what it will open up to you will be reward cards - cashback, airmiles, clubcard points, etc.,  whatever is most useful to you.

But the crucial point is to ALWAYS repay the statement IN FULL, WITHOUT FAIL, every month.  This is important for anyone, in order to avoid paying interest, but perhaps even more so if your primary aim is to improve your credit history (which is important if you want to apply for further credit in the future, including a mortgage).

rhewitt

Thanks for the advice guys

Usually I do pay the full balance, however for full transparancy the last month I didn't because it was christmas and had a lot of spending elsewhere.

I did however pay more than triple the contractual minimum payment, and usually I do clear the full balance.

Moving forward my aim is to accept the increase, but basically barely use the card at all, aside from perhaps £20 a month or something (and pay in full) for keeping a good record. Does that sound like a good idea?

[Deleted User]

Try to use the card for all your regular spend and clear in full.

If you shy away from using it, your limits will starting going south again.

rhewitt

Deleted_User said:

Try to use the card for all your regular spend and clear in full.

If you shy away from using it, your limits will starting going south again.

I will perhaps try to spend a little more on it, the issue is however that I have a newer card (Post Office [via Capital One]) with a slightly lower APR and lower limit that I'd prefer to use

While I know the APR isn't a problem when paying in full, I'm presuming if I use the newer card with the lower limit, it would improve the chances of them increasing it?

This is why I planned on keeping the amount small for the older, higher APR card with already higher limit. However any further advice is always appreciated.

Thanks for all your help!

rhewitt

(I just realized I forgot to mention the newer Capital One card in my original post.. oops)

Basically the Capital One card is newer, has had no limit increases, and is still one of the high APR cards

I still haven't been accepted for any below 35-40%.

ManyWays

If you clear the balance in full every month and spend less than  30% of the current limit, then having a larger limit wont improve your credit score at all. 

I would suggest declining the interest, sit back and make small payments to each of the cards and repay in full. look again for a better APR card in 6-12 months.

But why do you want a card with a better APR unless you intend to run a balance? if you do, even 20% is an expensive way to borrow.

if you don't want to run a balance, then the current cards with the current limits will be find for your credit score. Simple.