This weekend I saw that the internet bank egg decided
to cancel the credit cards of 161,000 of its customers. That seems like a
pretty big number to me, and it comes at a time when everyone is banging
on about the credit crunch. However, according to the bank, the move
actually has nothing to do with the credit crunch. Instead, it came after
a one off review of the company’s credit book after it was acquired by the
Citigroup last year. With this assessment, Egg claims that it no longer
wants to lend to people who carry an ‘unacceptably high level of risk’, so
it’s told 7% of its customers that they will no longer be able to borrow
on their cards in 35 days time.
However, it appears that’s not the full story. Disgruntled customers contacted the BBC website and expressed their anger at having their credit withdrawn, and it turns out that many were not high risk. In fact, some customers had gleaming credit histories, and frequently paid off the whole balance of their card. One Trevor Smith, of Nottingham, complained, ‘Egg may be cancelling high-risk customers, but they are also apparently ditching those, like me, who pay no interest because we are good creditors! It’s disgusting that they are making its just the bad ones who are being dropped.’
It doesn’t look pretty, and it’s pretty bad PR on the part of Egg, but (regrettably) I don’t think many people can do too much about it. Banks in the UK can effectively choose whenever they please if they don’t want to lend to people, whether you’re high risk or you’re just not making them enough money, which seems to be the case here.
Personally, I’m not really bothered by all of this, because I don’t use Egg. As a keen traveler, I think Amex cards have the most benefits. Somehow, I bluffed on my credit card application and got Platinum card a while ago (but I earn just enough money to qualify now). It’s pretty good because it arranges currency exchange on your card, and guarantees that you won’t find a better deal on the high street. I do pay it off all the time though; I’m just hoping this doesn’t get my card withdrawn!
However, it appears that’s not the full story. Disgruntled customers contacted the BBC website and expressed their anger at having their credit withdrawn, and it turns out that many were not high risk. In fact, some customers had gleaming credit histories, and frequently paid off the whole balance of their card. One Trevor Smith, of Nottingham, complained, ‘Egg may be cancelling high-risk customers, but they are also apparently ditching those, like me, who pay no interest because we are good creditors! It’s disgusting that they are making its just the bad ones who are being dropped.’
It doesn’t look pretty, and it’s pretty bad PR on the part of Egg, but (regrettably) I don’t think many people can do too much about it. Banks in the UK can effectively choose whenever they please if they don’t want to lend to people, whether you’re high risk or you’re just not making them enough money, which seems to be the case here.
Personally, I’m not really bothered by all of this, because I don’t use Egg. As a keen traveler, I think Amex cards have the most benefits. Somehow, I bluffed on my credit card application and got Platinum card a while ago (but I earn just enough money to qualify now). It’s pretty good because it arranges currency exchange on your card, and guarantees that you won’t find a better deal on the high street. I do pay it off all the time though; I’m just hoping this doesn’t get my card withdrawn!
