The Debt Clinic
Let's Make Your Finances Better
- Debt Management News (40)
- IVA News (9)
- Remortgage News (12)
- Loan News (19)
- Trust Deed News (3)
- Credit Check News (6)
- Latest News
- Most Popular Articles
Post New Article
Easy Product Advisor
Which solution is right for you?
Our test will give you an unbiased look at which service can help you
Shell Shock As Egg Cancels “Risky” Credit Cards
Web-based bank, Egg, is facing a call from former consumer affairs minister, Nigel Griffiths, to be investigated by the Financial Services Authority (FSA) after letting around 161,000 members know that their credit cards are to be cancelled and won’t work after the next 35 days, as they are deemed to be a liability.
Around seven per cent of Egg’s credit card bearers were sent a letter saying that they had a, “higher than acceptable risk profile,” and that they will soon be unable to pile pounds on to their plastic.
Members who have been sent this letter may have a poor credit rating, default on repayments, or max out their card – although some customers with seemingly perfect credit histories have already complained that they have also been told that their cards will cease to function. This has lead to allegations that Egg may be trying to dispense with less profitable card holders.
Although the letter also contains details about how to appeal against their decision, some people have been told by Egg call centre employees that appealing is impossible.
A spokesman categorically stated that this move was made not due to the bank struggling with the effects of the current credit crunch but after a risk assessment performed by Citigroup, who poached Egg last year.
It might be advisable for concerned consumers who rely upon their cards heavily to have a credit check carried out to see whether they are vulnerable to any other banks who may wish to follow Egg’s lead, although that will depend upon the outcome of any possible investigations by the FSA.
Although some credit card companies may begin an attempt to ditch members who make them little profit, this may encourage more people to take out secured loans which are seen as less of a gamble to lenders. A cheap secured personal loan could help clear debt through consolidation instead of encouraging spending.
Credit Check News posted on 05 February 2008
