To close or not to close?

flammable999 · 12 August 2018 at 11:46AM

I have often read on here, that it is hard to strike the balance as to what to do with unused cards. On the one hand, I have a lot of unused cards, but on the other hand I do currently have a utilisaion of 47% and obviously closing some cards, will increase this utilisation. Furthermore, a lot of my unused cards are quite old, showing some stability. Am playing the balance transfer game, hence the top heaviness amongst cards

What cards, if any do people think I should close looking at below current state of affairs?

Card / Balance / Limit / Age

Aqua / £0 / £4950 / 8 yrs
Vanquis / £0 / £3000 / 12 yrs
Tesco 1 / £2857 / £3250 / 1 yr
Tesco 2 / £2800 / £2800 / 2 months
MBNA / £5182 / £5400 / 1 yr
MBNA 2 / £2585 / £3000 / 1 yr
Capital One / £0 / £2500 / 7 yrs
Santander / £0 / £3700 / 3 yrs
M & S / £143 / £5500 / 4 yrs
Barclaycard / £2687 / £2900 /4 yrs

Any advice welcome.

eskbanker · 12 August 2018 at 11:58AM

Does your concern about utilisation ratio and age of cards signify that you're planning on continuing to seek further credit, even if just for BTs?

As you say, there's a balance to be struck, in that you currently have access to £30K+ of credit, and, unless you're particularly well paid, that could cause issues when prospective lenders consider affordability.

What are the APRs of each card and if any are 0%, when do they expire?

And what are your plans to repay these debts, i.e. are you expecting a decent lump sum in the near future or are you hoping to continue to shuffle the debt around?

flammable999 · 12 August 2018 at 12:05PM

eskbanker wrote: »

Does your concern about utilisation ratio and age of cards signify that you're planning on continuing to seek further credit, even if just for BTs?

As you say, there's a balance to be struck, in that you currently have access to £30K+ of credit, and, unless you're particularly well paid, that could cause issues when prospective lenders consider affordability.

What are the APRs of each card and if any are 0%, when do they expire?

And what are your plans to repay these debts, i.e. are you expecting a decent lump sum in the near future or are you hoping to continue to shuffle the debt around?

Well for some of the sub-prime cards, the APR's are very high. For all the others, range between 16-19%. All the ones with a balance apart from M&S are currently on BT and I plan to keep shuffling them., chipping away where I can. The expirys range from Feb 19 to June 21

My main worry is I am looking to re-mortgage in about a year so was wondering how the above and credit utilisation will affect my chances of that.

onlyfoolsandparking · 12 August 2018 at 12:40PM

I have 9 cards which i play the B/T shuffle and all 9 are interest free, its tricky to keep them all 0% but not impossible. Looking at your cards and if it was me i would definitely get rid off Aqua, Vanquis and maybe Capital one too i think the first two hurt your credit worthiness, they are credit builder cards with extortionate rates. then i would look at opening a couple of new ones more mainstream card/s that offer great 30-40 months B/T deals. Virgin and Halifax would be an obvious choice if it were me in your position. Actually just re-reading your post maybe keep the Capital one as you've had it a long time, lenders like us having cards a long time, maybe get rid of the M&S one instead.

Of course it closing accounts down with high credit limits and applying for new ones is always a bit of a gamble i,ve done it closed a card down with 17k limit then got offered new one with 7k limit???? so up to you in the end.

eskbanker · 12 August 2018 at 12:41PM

As you recognise, there's no right or wrong answer to this, but personally I'd have thought that prospective lenders would be able to see that, while the sub-prime cards may have been open for a relatively long time, they're clearly no longer in active use and therefore aren't really signifying the positive picture of credit management that's usually cited as the reason to retain cards.

Closing them and reducing available credit obviously increases utilisation ratio but improves affordability as measured by total credit v income.

In the context of remortgaging there are obviously a range of other parameters that are relevant, in terms of income, property value/equity, etc, so perhaps worth discussing your situation with a mortgage broker?

flammable999 · 12 August 2018 at 12:43PM

onlyfoolsandparking wrote: »

I have 9 cards which i play the B/T shuffle and all 9 are interest free, its tricky to keep them all 0% but not impossible. Looking at your cards and if it was me i would definitely get rid off Aqua, Vanquis and maybe Capital one too i think the first two hurt your credit worthiness, they are credit builder cards with extortionate rates. then i would look at opening a couple of new ones more mainstream card/s that offer great 30-40 months B/T deals. Virgin and Halifax would be an obvious choice if it were me in your position.

What you say makes sense, but Aqua and Vanquis are also cards that show a greater age, which I am led to believe increases stability as well as their generous limits. I have no intention of ever using them again due to their rates but keep them for the above reasons. Plus I am not sure if lenders can see the company names when they do their own checks

I will look into Virgin and Halifax though when some of my current ones expire.

flammable999 · 12 August 2018 at 12:44PM

eskbanker wrote: »

As you recognise, there's no right or wrong answer to this, but personally I'd have thought that prospective lenders would be able to see that, while the sub-prime cards may have been open for a relatively long time, they're clearly no longer in active use and therefore aren't really signifying the positive picture of credit management that's usually cited as the reason to retain cards.

Closing them and reducing available credit obviously increases utilisation ratio but improves affordability as measured by total credit v income.

In the context of remortgaging there are obviously a range of other parameters that are relevant, in terms of income, property value/equity, etc, so perhaps worth discussing your situation with a mortgage broker?

Very true. It also makes sense why the credit club always says my affordability is weak.

onlyfoolsandparking · 12 August 2018 at 12:52PM

From what i can gather and other people may know better than me on this one, prospective lenders cant see in detail who else lends to you but they can see payment history and maybe credit limits/utilisation although i don't believe they can see credit limits as they they would never offer me anything ever again if they knew my card limits add up to 120k!!! so i work this way i NEVER miss any payments, don't go over limits, try and keep utilisation 30% or below and only apply for a new card when needed once in a 12 month period

Willing2Learn · 12 August 2018 at 1:14PM

onlyfoolsandparking wrote: »

...although i don't believe they can see credit limits

Potential lenders can see credit limits as that is a data field, recorded on your credit file.

onlyfoolsandparking · 12 August 2018 at 1:33PM

thanks, I said I wasn't sure about that one but makes sense for them to see it I guess

[Deleted User] · 12 August 2018 at 3:28PM

Lenders can see your limits and the account age but not whom the account is with.

Ask MBNA if they can consolidate the 2 cards into one for a start.

Then do the same for Tesco.

To close or not to close?

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