Finished with Credit Cards - What is best to do

BendyTaffies

Hi, I have around 5 credit cards with zero debt on, and their initial offers have expired. In my head, I'd close the accounts and apply for a new purchases credit card and go from there, but I don't want to do anything detrimental to my credit rating. What's the best approach?

grumbler

What do you want to achieve by getting a new purchases card?

CliveOfIndia

It's always a bit of a balancing act.  On the one hand, long-establish and well-managed lines of credit reflect positively on your credit history.  On the other hand, having too much available credit can be viewed negatively.

Personally I'd say keep 2 or 3 of the oldest ones open, use them for a small purchase every month and always repay in full.  If a card is unused for a reasonable length of time (typically about 13 months or so) then the lender will usually close the account anyway.

Bear in mind, lenders do appear to be tightening their belts somewhat at the moment, so you may not be able to get a 0% purchase card as easily as you could in the past.  So it's worth keeping some of your existing cards open for that reason if nothing else.

BendyTaffies

grumbler said:

What do you want to achieve by getting a new purchases card?

I just use it for large purchases, usually paying it off every month or occasionally spreading the cost over a couple of months.

BendyTaffies

CliveOfIndia said:

It's always a bit of a balancing act.  On the one hand, long-establish and well-managed lines of credit reflect positively on your credit history.  On the other hand, having too much available credit can be viewed negatively.

Personally I'd say keep 2 or 3 of the oldest ones open, use them for a small purchase every month and always repay in full.  If a card is unused for a reasonable length of time (typically about 13 months or so) then the lender will usually close the account anyway.

Bear in mind, lenders do appear to be tightening their belts somewhat at the moment, so you may not be able to get a 0% purchase card as easily as you could in the past.  So it's worth keeping some of your existing cards open for that reason if nothing else.

Thank you for your help and advice - it's much appreciated  

CliveOfIndia

BendyTaffies said:

grumbler said:

What do you want to achieve by getting a new purchases card?

I just use it for large purchases, usually paying it off every month or occasionally spreading the cost over a couple of months.

So even if you can't get a 0% purchase card, an ordinary credit card would do the trick.  Obviously, the true MSE way would be to save up for a couple of months and then buy the item.

But making a large purchase and paying it off over a couple of months, even on an interest-bearing card, is not the end of the world.  In reality things happen, the washing machine expires or whatever.  Being pernickety, this is what you should have an emergency fund for.  But that aside, carrying a balance for a couple of months is OK-ish.  As long as you've planned and budgeted for it, and as long as it really is only for a couple of months - and only very occasionally

martinbainbridge1975

would not worry about your credit score, as many will rightly say on here it is a made up number and means nothing, it is your past history of paying that counts more. if you have 5 cards it could affect eligibility for a 6th due to the amount of available credit you have.

if it was me I would shut down 3 of the current cards and keep the 2 with the biggest credit limits and look at a new all round card, Barclaycard and MBNA i have found quite generous with limits when applying for new cards

lr1277

If you are confident about your income levels going forward and hence your ability to get credit, then the following doesn’t apply. If there is any doubt, please consider the following.
Co-branded cards are more likely to be closed with no replacement credit facility offered. Cards provided by banks are less likely (but not impossible) to be closed.
For example the N&P card was closed but that is the only bank provided closure I know about.
But my John Lewis card and Jaja card were both closed and with the latter closure, I lost fee free fx transactions.
I couldn’t get the replacement John Lewis card because my income had dropped.
Something to think about.

BendyTaffies

CliveOfIndia said:

BendyTaffies said:

grumbler said:

What do you want to achieve by getting a new purchases card?

I just use it for large purchases, usually paying it off every month or occasionally spreading the cost over a couple of months.

So even if you can't get a 0% purchase card, an ordinary credit card would do the trick.  Obviously, the true MSE way would be to save up for a couple of months and then buy the item.

But making a large purchase and paying it off over a couple of months, even on an interest-bearing card, is not the end of the world.  In reality things happen, the washing machine expires or whatever.  Being pernickety, this is what you should have an emergency fund for.  But that aside, carrying a balance for a couple of months is OK-ish.  As long as you've planned and budgeted for it, and as long as it really is only for a couple of months - and only very occasionally

Thank you! I have enough of savings but I’d rather make a little interest from that and make purchases on a credit card. 

paul_c123

BendyTaffies said:

Thank you! I have enough of savings but I’d rather make a little interest from that and make purchases on a credit card. 

Yes but don't fall into the trap of having savings at x% and paying a credit card balance at y%, where y is about 7 times x

Credit cards can be "interest free for up to 56 days so long as the statement balance is paid in full by the statement due date".

Alex9384

BendyTaffies said:

Hi, I have around 5 credit cards with zero debt on, and their initial offers have expired. In my head, I'd close the accounts and apply for a new purchases credit card and go from there, but I don't want to do anything detrimental to my credit rating. What's the best approach?

Close 1 or 2 which you consider the most useless (i.e. lowest credit limit or highest APR or shortest history).

I personally would keep at least 2 cards that are oldest. It's good for your credit history. Also depends on which bank it is. It may be worth waiting if they offer you some new interesting deal. For example Barclays or Lloyds/Halifax may offer you a good Money Transfer deal. You transfer money to your current account and then to saving account. You won't make a huge profit but you can still earn something. Plenty of saving accounts have now higher rates than fees you'll pay for money transfer. Halifax just upped my MT offer from 12 months to 15 months at 0% and at the same time they lowered the fee, so I just transferred 13k from that card to my account.