Keeping unused Credit Card vs Cancelling

Mahsroh

I have 3 credit cards with a combined limit of 31,400......

As of today, my combined balance is ZERO.

One of the cards (with an 11,400 limit) I do use regularly for general purchases and typically pay off all of the balance every month. Typically has no more than 500 pound on it at any given time.

The second (limit 12,000) is currently unused and hasn't been used since I paid off the balance of an interest free balance transfer a few months ago, but I am looking into the possibility of doing a new interest free money transfer of a couple of grand onto that card to cover the cost of some minor home improvements*, so intend on keeping the card for now.

The third (8,000 limit) is unused and has been unused now for over a year. This one i'm considering just cancelling but I hear so many conflicting views as to whether it's better to have a high credit limits with low utilisation or whether it's better to reduce your limit / available credit. Ultimately even if I cancel that third card i've still got a combined limit of 23,400 and even then my utilisation is never likely to go much over 10%. 

No real reason to apply for any credit any time soon or borrow any more money (other than the aforementioned home improvements) but will be looking at a new Mortgage deal in around 18 months time and just trying to work my credit history into the optimum position. I even asked my Mortgage broker for advise on this when we bought our house but didn't really get a straight answer, so any advice is much appreciated!  

(*note: The 2k i'm considering a money transfer on I do have in savings so I'm not borrowing money I don't have, i'd just rather keep in savings and pay the 4% upfront fee and pay off gradually during the interest free period whilst keeping the savings in the bank from a cash flow perspective for any unexpected bills / change of circumstances.)

[Deleted User]

If you only have the three cards, keep them all.

Brie

Are all 3 cards from different banks/providers?  Could you do a balance transfer from any one to either of the other two?  If like us you have 2 different MBNA cards you might consider cancelling one of those only so that you can apply for a different provider's card in the future.

*note: The 2k i'm considering a money transfer on I do have in savings so I'm not borrowing money I don't have, i'd just rather keep in savings and pay the 4% upfront fee and pay off gradually during the interest free period whilst keeping the savings in the bank from a cash flow perspective for any unexpected bills / change of circumstances.

Why?  Why pay 4% if you have the money in the bank?  Pay what you must on the cards for the improvements, do a BT to get the amount on to 0% (usually less than a money transfer) and pay for the rest (setting with the builders?) from your savings.  Should you have a sudden emergency you still have all that credit available on the cards and can do a money transfer at that point should you really need to.  The savings are likely earning you diddly so why pay to continue to earn diddly.

Mahsroh

Brie said:

Are all 3 cards from different banks/providers?  Could you do a balance transfer from any one to either of the other two?  If like us you have 2 different MBNA cards you might consider cancelling one of those only so that you can apply for a different provider's card in the future.

*note: The 2k i'm considering a money transfer on I do have in savings so I'm not borrowing money I don't have, i'd just rather keep in savings and pay the 4% upfront fee and pay off gradually during the interest free period whilst keeping the savings in the bank from a cash flow perspective for any unexpected bills / change of circumstances.

Why?  Why pay 4% if you have the money in the bank?  Pay what you must on the cards for the improvements, do a BT to get the amount on to 0% (usually less than a money transfer) and pay for the rest (setting with the builders?) from your savings.  Should you have a sudden emergency you still have all that credit available on the cards and can do a money transfer at that point should you really need to.  The savings are likely earning you diddly so why pay to continue to earn diddly.

On the first point yes 3 different providers as such - although one is MBNA and one Halifax which are part of the same group I think? 

On the 2nd point, good point about paying on card then doing a BT, but the difference in the upfront fee is fairly negligible 3.5% for BT vs 4% MT, so in practice it's a tenner on 2k, but i'll be paying tradespeople many of whom don't accept CC's. 

Most of the savings is an Investment ISA which does have a reasonable rate of return (obviously varies) but 80 quid on 2k over 18months probably isn't entirely unrealistic, plus perhaps i'm just too risk averse but I just feel more comfortable knowing that if I lost my job (even though i'm 99.9% sure it's secure) i've got the cash readily available in the bank / investments that i'd be able to continue paying the mortgage / bills (yes i'd have the CC debt but I could make just the minimum payments until my job situation was sorted). 

Brie

Fair enough!

I've seen some cards that offer both BT & MT but with a substantial difference in fees - sometimes 1.5%  And if you had your savings in a standard acount earning your a wopping .01% the difference would be enough to make you pause.  An investment ISA is a different thing though.

I'd check with MBNA & Halifax to see if they accept transfers from one to another.  If only for future reference. 

Mahsroh

Brie said:

Fair enough!

I've seen some cards that offer both BT & MT but with a substantial difference in fees - sometimes 1.5%  And if you had your savings in a standard acount earning your a wopping .01% the difference would be enough to make you pause.  An investment ISA is a different thing though.

I'd check with MBNA & Halifax to see if they accept transfers from one to another.  If only for future reference. 

Thanks - i *think* i've done a BT transfer between the two in the past, but not 100% certain, so I will check. 

sallyFun

I'd keep all 3 credit cards.

Thrugelmir

In time if you don't use the cards. Expect the credit limits to be cut. 

Dandytf

Thrugelmir said:

In time if you don't use the cards. Expect the credit limits to be cut. 

Does that happen often, I'm considering closing some from 2021.
Change from petrol to ev eliminates fuel purchases.
 

mcpitman

Dandytf said:

Thrugelmir said:

In time if you don't use the cards. Expect the credit limits to be cut. 

Does that happen often, I'm considering closing some from 2021.
Change from petrol to ev eliminates fuel purchases.
 

I've never had a credit limit reduced and have had some cards sat "idle" for 24-36 months.

Mahsroh

mcpitman said:

Dandytf said:

Thrugelmir said:

In time if you don't use the cards. Expect the credit limits to be cut. 

Does that happen often, I'm considering closing some from 2021.
Change from petrol to ev eliminates fuel purchases.
 

I've never had a credit limit reduced and have had some cards sat "idle" for 24-36 months.

I have had one automatically cancelled after several years of inactivity tbf, but on that occasion I had multiple warnings telling me to contact them if i wished to keep the card.