Banks cancelling credit cards belonging to ’good payers’
John McFall, the chairman of the treasury select committee, has announced that banks may be cancelling the credit cards of good paying customers and giving them to riskier ones in a bid to boost profits.
Apacs, the trade association for payment services, is denying that banks are making such moves and added they are merely looking at credit levels and how they could ‘rationalise’ them.
Last week, Egg, withdrew the credit cards belonging to 161,000 customers whose credit profiles have deteriorated since they signed up. However, many of those affected have said they always pay their bill off in full every month and never go over their limit and have excellent credit ratings.
It was rumoured that Egg withdrew the credit cards because the customers did not make it enough money which Egg has denied.
Mr McFall has recently said that credit card companies were not being transparent. Now he says they may not be being fair to their customers.
He said ‘are we witnessing a situation where credit card companies are taking cards away from perfectly safe customers who pay their bill in full every month on the same date for years and giving it to customers who are riskier. And if they are doing so, then their methods have to be called into question’.
A spokesperson for Apacs said companies have the right to make changes as they see fit. A credit card company is a business and it will always be looking to do one of two things: either making sure that it’s lending money responsibly to people who can afford to repay any money that they’re borrowing, and secondly, as a business that needs to make a profit, deciding whether it wants to give you and I a card, the spokesperson added.
Over two-thirds of UK adults have a credit card with 68% of them pay off their borrowing in full every month.