Egg delivers another blow to customers

Following the 0.25% reduction in interest rates last week, internet bank Egg have reduced the rate on their internet savings account from 5.5% to 5.0%.

This is the second blow in as many weeks as Egg withdrew the credit cards belonging to 161,000 customers whose credit profiles have deteriorated since they signed up. This also included customers who missed repayments or exceeded their credit limit.

Until the end of last year, Egg’s internet account came with a promise that its before-tax rate would at least match base rate (5.25% from last week).

However, now that the guarantee has expired, the bank has taken a heavy hand to the account. Loyal savers now earn 4% after savings tax (5% before tax) down from 4.4% (5.5%). Consequently, Egg no longer features in the best-buy savings tables.

Those seeking a higher rate should look to foreign banks entering the British market including Icelandic-owned Kaupthing Edge. Following the cut in interest rates, Kaupthing Edge announced that it was retaining its saving rate at 6.5%.

Other foreign banks entering the British market include Nigerian-owned FirstSave, Icelandic Icesave, ICICI of India and Dutch-owned ING Direct.

It was announced earlier this week that The Office of Fair Trading is investigating Egg, as many of the customers affected have said they always pay their bill off in full every month and never go over their limit and have excellent credit ratings.

Egg was once owned by UK insurance giant Prudential but is now part of the US-owned Citigroup.

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