Trying to get debt free - Cancel or not cancel

Hitched2020

I've read various threads on here in relation to cancelling cleared credit cards. 

I'm currently in about 25k debt and I've had a promotion at work so working on clearing my debt, all of it is interest free. 

Between the two of us we have 7 credit cards.

Halifax £0
Halifax £0 after today
Virgin £1200
Aqua £500 
Barclay Card £2700
Barclay Card 3700
MBNA £9900

(A rough estimate)

I tend to use aqua to pay for things ad hoc and pay more or less the full balance monthly. 

I'm just wondering whether you would suggest closing any of the accounts. I'm thinking the aqua and do what I do with that with either the Halifax or the Virgin one as they've got to be a better credit card than aqua should anything go wrong. All got fairly high limits available. 

I'm desperate to shift this debt over the next two years but makes me itchy having empty accounts, does it look bad on the utilisation? 

cymruchris

I would keep the accounts if you're comfortable to be able to manage them - keeping them empty - aside from the odd single purchase to keep them active - and then paying in full.

If you start closing accounts it will increase your utilisation -something that can go against you when applying for further credit.

It will also spook the credit history record - as any future lender will wonder who closed it - you or your bank.

While getting your cards down to zero - keep them all open. 

Then when you're confident that you have nothing planned on credit for at least 6 months - you can close a couple of the high APR or low credit limit accounts.

callum9999

cymruchris said:

It will also spook the credit history record - as any future lender will wonder who closed it - you or your bank.

This paragraph doesn't seem accurate to me (though you advised them to close some anyway so I don't really know what you're meaning by that!).

It's completely normal to close credit cards, and even putting aside it's likely a computer algorithm deciding and not a person, I don't think any lender is going to see a card with a positive payment history being closed and seriously think "what if they know something we don't and forced them to shut the card".

You're right that it will impact utilisation, and it will also impact on average account age. I suspect closing a couple of the smaller unused ones will have absolutely no negative impact at all - but it's hard to say without a clearer picture.

[Deleted User]

Dont struggle your debt on your own! 

Graham1982

callum9999 said:

cymruchris said:

It will also spook the credit history record - as any future lender will wonder who closed it - you or your bank.

This paragraph doesn't seem accurate to me (though you advised them to close some anyway so I don't really know what you're meaning by that!).

It's completely normal to close credit cards, and even putting aside it's likely a computer algorithm deciding and not a person, I don't think any lender is going to see a card with a positive payment history being closed and seriously think "what if they know something we don't and forced them to shut the card".

You're right that it will impact utilisation, and it will also impact on average account age. I suspect closing a couple of the smaller unused ones will have absolutely no negative impact at all - but it's hard to say without a clearer picture.

I am not qualified to wade in on this but I was told on the debt free wannabe forum that closing credit accounts can throw up questions as often creditors close accounts of the financially irresponsible so the assumption might be made that if several cards are closed, the pattern could be interpreted as several creditors removing a service because of poor management by the customer. By the way I am basing this on my situation, not the OPs and I am not saying they are financially irresponsible.

I was told rule of thumb: Clear balances, keep lines of credit open.

Thanks

Graham

cymruchris

callum9999 said:

cymruchris said:

It will also spook the credit history record - as any future lender will wonder who closed it - you or your bank.

This paragraph doesn't seem accurate to me (though you advised them to close some anyway so I don't really know what you're meaning by that!).

From board experience - it's often mentioned that closing cards can have a negative impact on your short term positive history. So closing several accounts in succession might 'look' as though the banks have decided to withdraw their services - although it can be as in this case someone wanting to rationalise their portfolio, the trouble is, there's no way on your data to show whether it was you or the bank that made the decision to close the accounts (would be nice if the data was included though).

I then mentioned if you have nothing to apply for over the next 6 months, that might be a good time if you want to close a couple of high APR accounts. (As with everything on your history - time is always a great healer). I agree with Graham above - Generally clear balances and keep credit lines open.

In my own experience - I've continued to build positive history, keeping cards active an open (my first credit card post-bankruptcy was a Vanquis - I pop a transaction on once every couple of months to keep it alive - as it's now my oldest card - and banks like stability). I have closed a couple of Capital One accounts though - but did that at the time of opening a new card - so the records show a new account being added, and one being taken away. 

It's all logarithms and data though - churned through machines. We're all giving our best guesses as to what they are looking for, and it'll vary from bank to bank. And our experiences will vary person to person. That's the nature of forums though - discussion - evaluation - and then decide what's best for us. There will always be polarising views - and it's rare that everyone will agree with everyone - but that's my twopenneth as they say

Hitched2020

I'll leave at as is, it's no skin of my nose, it sits hidden away. Only reason I'd be cancelling was for peace of mind more than anything, 7 credit cards, 3 bank accounts and several finance agreements seemed a lot but if it makes no odds negatively but potentially does positively I'm more than happy to keep it. 

Thanks for the support. 

Jami74

I closed a couple of unused credit cards recently, then got accepted for a new credit card with a limit 5x what I asked for. I knew I wouldn't be applying for a mortgage or be desperate for credit any time soon so decided it didn't matter if it had any short term affect on my credit history. Saying that, I also wasn't carrying any bad debt, I was just closing cards where the promotional rate had expired and they had been paid off.

MalMonroe

Hitched2020 said:

Deleted_User said:

Dont struggle your debt on your own!  https://mydebtsupport.co.uk/

No thank you.

'Deleted_User' comment reported as spam.

MalMonroe

Hi, most CC companies allow you to freeze your card if you don't anticipate using it for a while. It's easy to do and it's also easy to undo. I've done it with both Virgin and Tesco credit cards. Just in case!

[Deleted User]

I used to have a sainsburys credit card which  I kept for emergencies, as it wasnt used very often sainsburys cancelled it!