Egg Money Rate Increase to 16.9%

withnell

financial_warrior wrote: »

As someone with plenty of info from inside Egg, I would advise against retaining this product, once you have been affected by a single APR increase.

The product in its current form is unprofitable for Egg, and its owner Citi. They're no longer accepting new customers (http://egg.com/visitor/0,,3_108938--View_2319,00.html) - they're in the process of killing the Egg Money product.

Existing Egg Money customers are having their standard APRs increased significantly, in an attempt to get them to close their accounts and take their card business elsewhere. Not only that, but those affected by the August 08 round of increases are also being hit again. If your APR has just increased from say 7.9% to 12.9%, you are highly likely to receive another email in August informing you that the rate will be increasing from 12.9% to 16.9%. Those who have already been pushed up to 16.9% should expect a push to 21.9% in the summer.

Because they're no longer selling the product, the typical APR (originally quoted as 7.9%) has gone out of the window... This pretty much gives them a green light to price everyone out of their accounts.

I am confident that the 4% interest on a positive balance will soon be reduced, or completely withdrawn, once a surge in deposits occur. There have been musings for a while that the cashback promotion would not survive, and I am pretty sure existing product holders will see this slashed to 0.5%, if not completely phased out.

It's crucial to understand that Egg (and Citi) have made a decision that they do not want to service this product any more. Even if you accept the changes, that won't be enough, as you'll be a part of an ever dwindling customer base, which will make the operating costs on your account even higher for them. The safest bet is to move to a new account provider before things get costly, or Egg start forcing account closures.

This is probably relevant for someone with a negative balance on the card - but at 1% cashback on everything I'm keeping mine to the bitter end!

dankosheemo

financial_warrior wrote: »

26.9%!?! Yikes :eek: - Egg are stepping to new lows (or highs)

Please bear in mind that if you've told them you're cancelling, and staying on your current rate until the balance is paid-off, they won't pay the cashback you're owed.

If your balance is fairly high, then the cashback is going to be fairly insignificant compared to the potential cost of any rate rise, so I'd take the APR freeze, and just work on getting that balance paid off.

I nearly fell off my chair as I read the email so straight on the phone. I suppose I'm quite lucky that I don't spend on my card and haven't done for probably two years, just used it for BTs so I've got around £490 to pay off now. Aim: 1st June 2009! Just goes to show everyone needs to keep an eye on their APR rates!

financial_warrior

withnell wrote: »

This is probably relevant for someone with a negative balance on the card - but at 1% cashback on everything I'm keeping mine to the bitter end!

:rotfl: You honestly think that'll be 1% once they've paid out in March? The industry norm is 0.5% these days.

withnell

financial_warrior wrote: »

:rotfl: You honestly think that'll be 1% once they've paid out in March? The industry norm is 0.5% these days.

Well then if they pay 0.5% so be it....

What do you suggest, everyone moves away from the Egg stable and takes up an equivalent paying card elsewhere? Apart from hastle for me, what's the gain? Do you have a vendetta against your employer?

CopperPlate_2

Egg Money has stood out over the last year as one of the last remaining 1% payers when the rest of the industry was paying 0.5% or nothing at all. I'd be very surprised if Egg didn't cut the rate back or, worse still, just phase the card out completely (which it has effectively started to do by closing it to new applications). The rate was always up for review since when it was launched it paid cashback guaranteed until March 200? (anyone remember exactly which year?) then they extended it from memory, informally but didn't advertise it. Since then there's never been any 'finish date' for the cashback, but they could legitimately claim that they've been extending it ever since.

It does seem that they are trying to hack cardholders off by raising rates so soon after the last wholesale raise (August 08?) - their website blithely makes reference to reductions in rates as well as increases (in that order, clearly an implication perhaps that there were more reductions than increases perhaps!). From the comments so far, don't see anyone who has had their rate reduced.

YorkshireBoy

CopperPlate wrote: »

The rate was always up for review since when it was launched it paid cashback guaranteed until March 200? (anyone remember exactly which year?)

I believe it was 2007. Despite it being launched in September 2005 I didn't get mine until January 2006 and I'm sure it didn't have an "only guaranteed for 2 more months" clause.

It does seem that they are trying to hack cardholders off by raising rates so soon after the last wholesale raise (August 08?)...

It seems to me like they're exploiting (to the max) the new 'rules'...don't they say that lenders can't/shouldn't review rates more frequently than once per 6 months for existing customers?

financial_warrior

There may have been a few people who experienced rate reductions; if there are I would be keen to know who, and how many?

It seems clear from the people posting on here that both full-payers and people carrying balances are being targeted by increased APRs.

There's no methodology or system in play here. Every single customer holding the Egg Money product is being targeted, ultimately for account terminatation. Hang on as long as you like, they've made a business decision to kill this product, and they will keep increasing APRs every 6 months until everyone leaves on own accord. Don't forget, they created a lot of bad press off the back of the 160,000 forced account closures last year, so they're looking for other techniques of off-load customers.

IWantToBeFree_2

Given that a large amount of people hold Egg money for the cash back rather than the low APR's etc, if they really wanted people to leave of their own accord, then surely the best way would be to cut the cashback first?

Imani

Bulla wrote: »

Does anyone know yet whether choosing to close your account and paying it of month by month will have an adverse effect on a credit rating ?

I havent spent on my egg card for over 6 months and I'm trying to get debt free.

Applying for other cards is not an option for me and I'm thinking closing this would be a better option ?

Any advice appreciated.

It should not affect your credit score, because although the account would be to egg an agreed terminated agreement account interest is still accrued. It would only effect your credit score if you missed a payment or the account was defaulted and terminated.

withnell

IWantToBeFree wrote: »

Given that a large amount of people hold Egg money for the cash back rather than the low APR's etc, if they really wanted people to leave of their own accord, then surely the best way would be to cut the cashback first?

Shhhhhhhhhhhhhhhhh!