Egg Cancels Credit Cards

2nd February 2008

Internet bank Egg has taken the unusual step of sending letters to 161,000 customers, some 7% of the banks customer base giving notice that their credit card will be cancelled in 35 day's time. Egg which issues a Visa credit card, says that the cards belong to customers whose credit profiles have deteriorated since they they were issued with their Egg credit card.

Egg cardholders will be allowed to continue to make the minimum monthly payments, or higher repayments if the customer chooses, on their outstanding balances but will not be allowed to make any new purchases using the card. Egg was bought by the giant US based Citicorp last year for some £575 million.

It is believed that the "credit crunch", where banks are becoming much more strict about who they will lend to, has been a factor in the decision taken as well as the review undertaken following the Citicorp takeover.. Some customers have reacted angrily to Egg's description of their profile as "high risk" although the bank has now modified it's description to "those it no longer wanted to lend to regardless of risk".

Customers who have their Egg card cancelled should not find that this will have a detrimental effect on their credit record and may actually improve it, as the cancelled card will show a settled balance and less credit as being currently available to the holder.