Bank wanting zero balance on reward credit card

Londonian001

Hi, I'm in the middle of a mortgage application and the bank is currently holding it up because they want a zero/nil balance on two credit cards I use for my daily spending and then pay off each month. The cards are a paid (£300 annual) BA Amex Premium Plus (and a back up Barclaycard Avios Mastercard for where Amex isn't accepted). I'm a frequent traveller and save of lot of money on travels with these Avios collecting cards.

Asking for a zero balance on these cards doesn't make sense because if I don't use them, I lose the benefit. The last statements for both card showed a combined balance of around £70 as I was reluctant to use them in the middle of the mortgage application but it's now been 2 months and I can't keep not using them whilst paying for them.

Has anybody been in that situation before? The mortgage is quite small £140k over 27 years, I earn over £62k annually and I have no other debt. Seems extremely strict, the bank is TSB my broker said they're talking to them about it but I rang TSB directly and they said the still want a zero balance statement.

Stuart_W

Are there other complexities holding up the application? 2 months seems unusal. In the whole scheme of things, temporary loss of the benefit to allow a better mortgage deal is worthwhile overall. Clear the balance (manually, don't wait for the direct debit, make sure it's the balance as of today not the last bill balance ) and show the bank evidence. Once the mortgage is approved, go back to using the cards.

Isthisforreal99

https://forums.moneysavingexpert.com/discussion/6665365/bank-wanting-zero-balance-on-reward-credit-card

It does seem strict on those salary and mortgage figures but their money, their rules - they don't care if you are paying a fee and losing out on points.s

Not sure how you "can't keep not using them whilst paying for them" as it seems rather simple to not use them until the mortgage is completed.

jackieblack

OP, I was in a similar situation last year, I continued using my card to collect rewards, but every time I did I made a payment of the same amount so the balance wasn't above zero at the end of each day

flaneurs_lobster

Not sure how you "can't keep not using them whilst paying for them" as it seems rather simple to not use them until the mortgage is completed.

Suspect that the OP shares my view that any card that carries a fee should always be used such that cashback/reward earned should exceed the cost of ownership.

But yes, maybe just consider the loss of Avios as part of the mortgaging costs.

TroubledTarts

A different mortgage provider springs to mind

pramsay13

I had around £8,000 on a 0% credit card and the same amount in a savings account earning a decent amount every month but to get the mortgage I had to clear it so I had a £0 balance.

It didn't make sense as I could clearly pay it off any time and did so to get the mortgage even though I lost the monthly interest on the savings.

MattMattMattUK

https://forums.moneysavingexpert.com/discussion/comment/81974161#Comment_81974161

It makes total sense from the bank's perspective, they have to use debt and income for affordability and risk, they are not allowed to consider savings.

silvercar

We’ve had a condition attached to the mortgage offer, that cards have zero balance. Our solicitor took that to mean that when we draw down the mortgage (ie the day before completion) we had to show zero balance on the cards.

artyboy

https://forums.moneysavingexpert.com/discussion/comment/81974156#Comment_81974156

This. I'm surprised that the lender wouldn't be satisfied by proof that the card balances are consistently paid off in full, every month. That is them being used exactly as intended, and entirely responsibly, because it is actually generating a return.

It's carp like this that makes me very glad I'll never need another mortgage. Back in the "good" old days they were practically throwing money at us 😬

RelievedSheff

https://forums.moneysavingexpert.com/discussion/comment/81974187#Comment_81974187

We have just had the same with our mortgage offer from Halifax. The conditions were we had a zero balance on the credit card and we paid off a HP agreement that literally had one repayment remaining!

Although our solicitors have never asked for any proof either was paid off.

I think lenders are being a little more cautious than normal at the moment. We were well in on affordability with the amount borrowed even taking account of the credit card and HP agreement.