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  • FIRST POST
    • SammyVey
    • By SammyVey 11th Mar 18, 7:08 PM
    • 2Posts
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    SammyVey
    Beneficial to decrease credit limit?
    • #1
    • 11th Mar 18, 7:08 PM
    Beneficial to decrease credit limit? 11th Mar 18 at 7:08 PM
    Hi,

    Just wondering if I'm thinking along the right lines here...

    Card #1 - Asda Cashback £4000 limit, very low balance set to pay full amount via DD
    Card #2 - Virgin Money £2600 limit 0% purchases for 26 months, £700 balance set to pay min amount via DD

    I originally applied for the Asda card after moving into a rented flat to earn some cashback + S75 on larger purchases and also for everyday spending, initial usage of this was £1-2k/month but now unless there's sudden unexpected costs i'd expect it to only hit a balance of £250-£500.

    I also recently applied for the Virgin Money card to free up some of my savings to take advantage of current account interest rates, I'm also able to pay off the Asda card with this, so gaining both cashback and 0% on the same purchases, the Asda card doesn't take the DD if full payment is made via the Virgin Money card so this works out well.

    Going forward obviously I'll hit the limit on the Virgin Money card long before the promo rate is over and I feel the high (for me) limit on the Asda card both reduced the limit I could've received on the Virgin Money card as well as affecting it in the future if I request a limit increase.

    For clarity I'm earning minimum wage below £16000, my rent is around 30% of this and before these 2 cards I've had no true credit history due to being a lodger, using a PAYG phone and having no overdraft on my bank account etc etc.


    Would it benefit me to drop the Asda card to a £2000 limit to theoretically give Virgin (or another lender if it comes to it) more 'breathing space' when I request an increase in limit in a few months?

    If so is it best to do this now so it fully propagates across CRAs for when the time comes to request the increase?

    I'm aware this will increase my reported utilization a fair bit especially as the 0% card balance grows but I don't foresee applying for anymore credit anytime soon (outside of bank switches) and I have plans to renew my tenancy for 12 months so no mortgage plans anytime soon.
Page 1
    • A4445
    • By A4445 11th Mar 18, 7:14 PM
    • 755 Posts
    • 351 Thanks
    A4445
    • #2
    • 11th Mar 18, 7:14 PM
    • #2
    • 11th Mar 18, 7:14 PM
    I wouldn’t do anything your limits are quite low! Virgin my increase your limit after having it for 6months or more.
    • Gary_Dexter
    • By Gary_Dexter 11th Mar 18, 8:26 PM
    • 1,130 Posts
    • 627 Thanks
    Gary_Dexter
    • #3
    • 11th Mar 18, 8:26 PM
    • #3
    • 11th Mar 18, 8:26 PM
    Those are low limits anyway.

    And decreasing them may show to creditors that you can't manage credit
    • dazzaofdagenham
    • By dazzaofdagenham 11th Mar 18, 10:04 PM
    • 1,150 Posts
    • 384 Thanks
    dazzaofdagenham
    • #4
    • 11th Mar 18, 10:04 PM
    • #4
    • 11th Mar 18, 10:04 PM
    Low limits......blinking hell....on my amazon mastercard the limit is £500
    • bazzyb
    • By bazzyb 11th Mar 18, 10:27 PM
    • 1,191 Posts
    • 3,274 Thanks
    bazzyb
    • #5
    • 11th Mar 18, 10:27 PM
    • #5
    • 11th Mar 18, 10:27 PM
    Agree with the above, as the limits are low anyway then lowering them further could make it difficult to get a higher limit in future, I would keep them as they are personally.
    • nic_c
    • By nic_c 11th Mar 18, 10:45 PM
    • 1,450 Posts
    • 792 Thanks
    nic_c
    • #6
    • 11th Mar 18, 10:45 PM
    • #6
    • 11th Mar 18, 10:45 PM
    Card lenders may give you a lower limit to start if all other cards are low and increase it over time, or they may decide you are okay for a higher limit straight away. Its not a magic multiplier of your salary, so that if you lower the limit on one another creditor may feel they can now give you more. If your available credit is multiple times your annual wage, then maybe, but with a total available credit less than 1x your wage then available credit isn't the limiter for limits given for new credit
    • Ben8282
    • By Ben8282 12th Mar 18, 6:17 AM
    • 2,281 Posts
    • 1,016 Thanks
    Ben8282
    • #7
    • 12th Mar 18, 6:17 AM
    • #7
    • 12th Mar 18, 6:17 AM
    Some comments.
    You say you have the Virgin card which gives 0% on purchases for 26 months. Not sure which card this is as it doesn't correspond to any current Virgin offer.
    You also say that you are not using this card to make the purchases but are in fact using the Asda card for the purchases in order to get the cashback and then repaying the Asda card in full each month via the Virgin card. Presumably you are doing this by balance transfer. There is no Virgin card with 26 months on purchases but the 27 and 28 months on purchases cards charge a fee of 2.9% and 2% respectively on balance transfers made within the first 60 days (presumably 4% thereafter).
    As the balance transfer fee on the Virgin card exceeds the cashback on the purchases, why are you doing this? Why not just make the purchases on the Virgin card in the first place?


    In response to the question about reducing credit limits, the limits are already low. Reducing them would not be a good idea. especially if you intend only to make minimum payments on the Virgin card and fill it up to the limit.
    Last edited by Ben8282; 12-03-2018 at 6:19 AM.
    • SammyVey
    • By SammyVey 12th Mar 18, 7:15 PM
    • 2 Posts
    • 0 Thanks
    SammyVey
    • #8
    • 12th Mar 18, 7:15 PM
    • #8
    • 12th Mar 18, 7:15 PM
    Thanks for all the comments

    Some comments.
    You say you have the Virgin card which gives 0% on purchases for 26 months. Not sure which card this is as it doesn't correspond to any current Virgin offer.
    You also say that you are not using this card to make the purchases but are in fact using the Asda card for the purchases in order to get the cashback and then repaying the Asda card in full each month via the Virgin card. Presumably you are doing this by balance transfer. There is no Virgin card with 26 months on purchases but the 27 and 28 months on purchases cards charge a fee of 2.9% and 2% respectively on balance transfers made within the first 60 days (presumably 4% thereafter).
    As the balance transfer fee on the Virgin card exceeds the cashback on the purchases, why are you doing this? Why not just make the purchases on the Virgin card in the first place?


    In response to the question about reducing credit limits, the limits are already low. Reducing them would not be a good idea. especially if you intend only to make minimum payments on the Virgin card and fill it up to the limit.
    Originally posted by Ben8282
    The months I gave were just some rough maths from my statements promo expiry date, it will be one of the 27 or 28 month cards, unlike most credit cards the Asda card allows you to use another credit card if you wish to make an unscheduled payment, the Virgin Money card works for this and accepts this as a normal online purchase so I incur no fees doing so.
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