Stupid credit card question
Discussion
I have a few credit cards that now have the balance fully paid off but the cards are still active, had the cards just over a year or so. The offers are now finished ( 0% balance transfer etc.) and the cards are just sitting in a draw.
What’s the best thing to do with them? Do I just cancel them all as they are paid off, leaving them active, will it affect my credit score either way? Sorry for the stupid question !
What’s the best thing to do with them? Do I just cancel them all as they are paid off, leaving them active, will it affect my credit score either way? Sorry for the stupid question !
I had a beauty last month. A number of credits (i.e. refunds) had been made in to my credit card account AFTER the date of my statement but BEFORE the payment date. These credits exceeded my spending so the amount shown on the statement for me to pay was a ctually not payable at all. So I made no payment.
This month's statement correctly shows the credits against the account and correct balance carried forward. But on the bottom of the statement is a formal notice saying, "We are obliged to notify you that as you failed to make the minimum payment last month we have to log this in our records and it may affect your ability to obtain credit in the future".
Go figure!
This month's statement correctly shows the credits against the account and correct balance carried forward. But on the bottom of the statement is a formal notice saying, "We are obliged to notify you that as you failed to make the minimum payment last month we have to log this in our records and it may affect your ability to obtain credit in the future".
Go figure!
Ozzie Osmond said:
I had a beauty last month. A number of credits (i.e. refunds) had been made in to my credit card account AFTER the date of my statement but BEFORE the payment date. These credits exceeded my spending so the amount shown on the statement for me to pay was a ctually not payable at all. So I made no payment.
This month's statement correctly shows the credits against the account and correct balance carried forward. But on the bottom of the statement is a formal notice saying, "We are obliged to notify you that as you failed to make the minimum payment last month we have to log this in our records and it may affect your ability to obtain credit in the future".
Go figure!
What's wrong with that? You are contractually obliged to pay at least the minimum payment showing on a statement before the payment date. Credits are not you paying a minimum payment as per the contract. Even if paying the minimum payment would have taken your account into credit you are still legally obliged to pay it. This month's statement correctly shows the credits against the account and correct balance carried forward. But on the bottom of the statement is a formal notice saying, "We are obliged to notify you that as you failed to make the minimum payment last month we have to log this in our records and it may affect your ability to obtain credit in the future".
Go figure!
It won't affect your likely credit score keeping them open, if there's no balance on them, however...
Lenders look at your overall 'available credit', when you apply for new lending. If you've got 2 cards with £10k available (that you don't use), they're likely to take that £10k out of the overall amount they'll lend you.
So it's not actually the best idea to keep the highest limit going.
Lenders look at your overall 'available credit', when you apply for new lending. If you've got 2 cards with £10k available (that you don't use), they're likely to take that £10k out of the overall amount they'll lend you.
So it's not actually the best idea to keep the highest limit going.
Greshamst said:
It won't affect your likely credit score keeping them open, if there's no balance on them, however...
Lenders look at your overall 'available credit', when you apply for new lending. If you've got 2 cards with £10k available (that you don't use), they're likely to take that £10k out of the overall amount they'll lend you.
So it's not actually the best idea to keep the highest limit going.
Thank you, greshams, we are looking to remortgage in the new year so I think cancelling them is the best option for me and if I need one I can reapply as and whenLenders look at your overall 'available credit', when you apply for new lending. If you've got 2 cards with £10k available (that you don't use), they're likely to take that £10k out of the overall amount they'll lend you.
So it's not actually the best idea to keep the highest limit going.
craigjm said:
Ozzie Osmond said:
I had a beauty last month. A number of credits (i.e. refunds) had been made in to my credit card account AFTER the date of my statement but BEFORE the payment date. These credits exceeded my spending so the amount shown on the statement for me to pay was a ctually not payable at all. So I made no payment.
This month's statement correctly shows the credits against the account and correct balance carried forward. But on the bottom of the statement is a formal notice saying, "We are obliged to notify you that as you failed to make the minimum payment last month we have to log this in our records and it may affect your ability to obtain credit in the future".
Go figure!
What's wrong with that? You are contractually obliged to pay at least the minimum payment showing on a statement before the payment date. Credits are not you paying a minimum payment as per the contract. Even if paying the minimum payment would have taken your account into credit you are still legally obliged to pay it. This month's statement correctly shows the credits against the account and correct balance carried forward. But on the bottom of the statement is a formal notice saying, "We are obliged to notify you that as you failed to make the minimum payment last month we have to log this in our records and it may affect your ability to obtain credit in the future".
Go figure!
supersport said:
So how comes then when I don't spend anything I don't get charged the minimum payment on my direct debits then?
I dont know what you mean. Are you saying that when the balance is zero why dont you still have to pay a minimum payment? If thats the question then it is simply because you are not contractually obligated to because there is no debt at the point of statement. The important point is that your contract will say that you must pay a minimum payment if one is required. Trying to use credits to the card as that minimum payment does not mean you have made a payment others have and therefore you have broken the contractOzzie Osmond said:
craigjm said:
What's wrong with that? You are contractually obliged to pay at least the minimum payment showing on a statement before the payment date. Credits are not you paying a minimum payment as per the contract.
You think I should pay money I don't owe? That's insane.Your choice
craigjm said:
But at the point of billing you did owe it and therefore based on the rules of the contract you are contractually required to pay it. Doesn't matter whether you think it is right or not. Your contact with the provider will say that YOU are obligated to pay at least your minimum payment shown on the bill not others on your behalf through credits. If you continue to do that it will damage your credit rating as they will show as missed payments and eventually a default.
Your choice
This. It will (correctly) show on a credit score as a missed payment. When requested, you didn't make a payment. Unless you never planned to use the card again it would settle itself the following bill (and even if you never used it, you'd get a refund). Your choice
As for the OP, a lot of lenders look on your risk being a % of all available credit so having unused cards I don't consider a bad thing. If you have £1000 on a card with a £20k limit and nothing on another £20k limit card, it can show you are not credit hungry and reflect positively on your score. All IMO and although I have a banking background - it was some years ago!
When you apply for your next mortgage the lender will look at all your credit cards and limits as well as your overdraft limits. Same with anyone on the mortgage with you. If they assess you as worthy of £250k credit based on your income and expenditure multiples they will then proceed to reduce that figure by the credit limit on all your cards and overdrafts. This is what hsbc did to me 10 months ago.
Theoretically you could go on a spending spree and max out all those cards.
Start reducing your expenditure now in anticipation of your mortgage application. Stop playing the lottery until you get approval and tell your wife to grow her hair. Lol.
Theoretically you could go on a spending spree and max out all those cards.
Start reducing your expenditure now in anticipation of your mortgage application. Stop playing the lottery until you get approval and tell your wife to grow her hair. Lol.
Ste1987 said:
It won't affect your credit score. If it were me, I'd keep just the one with the highest limit and/or lowest APR, just in case
This is wrong. It does affect your score. You have open lines of credit that aren't being utilised. Credit facilities view this as poor credit management. Cancel the cards you don't use/need. kentlad said:
Ste1987 said:
It won't affect your credit score. If it were me, I'd keep just the one with the highest limit and/or lowest APR, just in case
This is wrong. It does affect your score. You have open lines of credit that aren't being utilised. Credit facilities view this as poor credit management. Cancel the cards you don't use/need. Once you have removed the Credit Cards AND Overdrafts you don't require, revisit the ones that remain and have a good look at the limits. These too can be pruned if need be.
Jockman said:
kentlad said:
Ste1987 said:
It won't affect your credit score. If it were me, I'd keep just the one with the highest limit and/or lowest APR, just in case
This is wrong. It does affect your score. You have open lines of credit that aren't being utilised. Credit facilities view this as poor credit management. Cancel the cards you don't use/need. Once you have removed the Credit Cards AND Overdrafts you don't require, revisit the ones that remain and have a good look at the limits. These too can be pruned if need be.
Just want to make sure we get the mortgage approved, thank you all for you advice
sunnygym said:
Ok so all my credit cards have been fully paid off and in the process of cane long then, I will contact my bank and reduce the overdrafts as they are not required, how liar do they look back ? 3 months or so?
Just want to make sure we get the mortgage approved, thank you all for you advice
A few years ago I contacted Virgin Card Services to reduce my credit limit - it was something really over the top, like >£20k. At the time they suggested not reducing the limit as this might appear to a lender as having being reduced by the CC company due to risk/bad credit management. Not sure how true this was, but damned if you do, damned if you don't.Just want to make sure we get the mortgage approved, thank you all for you advice
P.s just as a piece of advice on the mortgage front, it may be a good idea for the next 3 months to have a 'good bank account' and a 'bad bank account'.
I.e your good account is where you have your salary paid in, and your bills come out of. The one you give statements of to your mortgage lender.
Your bad account is where you pay for meals out, booze, frivolous purchases etc.
Try and pay for anything in the bad bank account with savings, and let your salary build up in your good bank account (that you can then pay back your savings with once the mortgage is completed)
It can help a lot with the new affordability rules. I often go out for meals with friends where I pay the whole bill on my card, and they pay me cash. If I didn't do this on the 'bad bank account' then the mortgage lender would assume I pay £600+ a month on eating out, when actually it's £120.
I.e your good account is where you have your salary paid in, and your bills come out of. The one you give statements of to your mortgage lender.
Your bad account is where you pay for meals out, booze, frivolous purchases etc.
Try and pay for anything in the bad bank account with savings, and let your salary build up in your good bank account (that you can then pay back your savings with once the mortgage is completed)
It can help a lot with the new affordability rules. I often go out for meals with friends where I pay the whole bill on my card, and they pay me cash. If I didn't do this on the 'bad bank account' then the mortgage lender would assume I pay £600+ a month on eating out, when actually it's £120.
Chris Type R said:
A few years ago I contacted Virgin Card Services to reduce my credit limit - it was something really over the top, like >£20k. At the time they suggested not reducing the limit as this might appear to a lender as having being reduced by the CC company due to risk/bad credit management. Not sure how true this was, but damned if you do, damned if you don't.
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