04 February 2008 12:47:13
|161,000 Egg customers to have their credit cards cancelled|
Egg is in the process of withdrawing credit cards from 161,000 customers who are believed to be unacceptably “high risk”.
The selected 7% of Egg’s customers will receive a letter to give them 35 days’ notice of the action.
After the deadline, those cardholders affected will not be able to spend any more on their cards but, they will still be able to make their minimum monthly repayments.
These plans come following a “one-off” review after Egg was last year bought by US-based Citigroup for £575m.
The bank have released a statement saying that it is not demanding repayment of balances or changing customers’ interest rates or terms and conditions.
The day the letter is received will mark the start of the 35-day notice period and the said letter will contains details of how customers can appeal against the decision. Egg will send e-mails to customers as a follow up these letters.
Chief executive of the British Bankers’ Association, Angela Knight, said that the action from Egg was “a sensible way of looking after a business”
“Whilst it is lovely to spend, it is the paying back that is always the difficulty. It might seem a bit hard to say to people ‘You do need to stop spending’ but it does actually make real sense to do so.”
Public affairs director of credit reference agency Experian reassured those affected by saying that the action would not impact negatively on their credit rating.
He advised: “Credit reports only have balances showing as outstanding or settled and a date. So when Egg updates its portfolio with us, it would just say those accounts have been settled.”
“That will not have a detrimental effect, it may even have a positive effect, but that depends on the scoring mechanisms used by lenders and the other balances the individual has. Some lenders might feel that someone with four is a better bet and the fact that one card is settled could be a positive sign. To other lenders it may make no difference. You can’t generalise.”
According to Egg spokeswoman, Rachel Roe, the customers affected by the move are those whose credit profiles have been deteriorating since they got their Egg card.
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