In May, I acquired a Virgin Money High Flyer Card and a NAB rewards card to take advantage of the points offers. I already had a Westpac Altitude (crappy card getting only 0.5 QFF point per $ spent). I now want to get the ANZ Black, to get 120k QFF points.
I have just cancelled the Virgin card. Do I need to cancel one of the others too, before I apply? If so I shall let go of the Altitude one.
How do you manage this when chasing cards? What happens to your credit rating?
I pay the cards off in full each month, have no debt and household income of +$200k.
I’m not a banking insider or an expert in how banks and credit card companies assess applications. And every bank is different and has slightly different lending criteria. But as a general rule, credit card applications will get approved or not approved based on some or all of the following:
- Your current level of debt including credit cards, home loans, personal loans, etc.
- Your potential level of debt (eg. if you have credit cards with credit limits totalling $100,000, the bank will assess whether you could pay the minimum payments on the full $100,000, even if your total credit card debt is less than that).
- Your current income and whether that gives you the ability to pay off your current and potential debt.
Banks seem to be less interested in the number
of credit cards you have, than in the total credit limits of your cards. For example, if you have two cards with large credit limits (say, $20,000 each), the banks will be less inclined to give you a new credit card than if you have five cards with low credit limits of, say, $3000 each.
The bottom line: the lower your actual and potential debt, the more likely it is that the banks will let you have new credit cards. The actual number of cards you have is, in my experience, irrelevant.
With the new Comprehensive Credit Reporting system, in theory at least, and everything else being equal, applying for a credit card should tend to lower your credit rating, and cancelling a credit card should tend to raise your credit rating.
One more thought: most credit cards charge an annual fee. If you’ve pocketed the bonus points and don’t really use the card any more, why give the bank money for a card that you’re not going to use?
Hope this helps!
Ok, that makes perfect sense, thank you!
I shall cancel the Altitude card as it has a $30k limit.