Egg withdraws credit cards for riskier clients
Internet bank, Egg, is to withdraw the credit cards belonging to 161,000 customers whose credit profiles have deteriorated since they signed up. This could also include customers who have missed repayments or exceeded their credit limit.
A spokesperson for the bank said those affected were customers it no longer wanted to lend to ‘regardless of their current status’.
Egg, which is owned by US bank Citigroup, sent letters to customers last Thursday informing them that they have 35 days to stop spending on their credit cards.
Cardholders will be able to continue making minimum monthly repayments on their balances but will not be able to spend any more after the deadline.
The decision will affect approximately 7% of Egg’s 2.2 million customers, it is believed the bank has been inundated with complaints.
A Labour MP is asking the banking industry watchdog, the Financial Services Authority, to investigate the matter. Nigel Griffiths, a former deputy leader of the House of Commons, said Egg’s action was unacceptable.
A spokesperson for Egg said we are sorry some customers are upset after receiving notification we are ending their credit card arrangement, but they are people we do not feel it is appropriate to lend any money to.
The spokesperson added the decision was taken after an extensive credit review following the acquisition by Citigroup.
Angela Knight, chief executive of the British Bankers Association, said that Egg’s action was ‘a sensible way of looking after a business‘.
The move is the first such action taken by a UK credit card issuer.