Your egg card will not be renewed - unfair practice?

Mr_K

You could keep Egg Money Manager just by opening one of their savings accounts and putting £1 in.

pqrdef

Keeping an idle card, just in case, doesn't necessarily work. When I asked Egg to cancel my Egg Card, I was told this had already happened the previous year - first I'd heard. I still can't get Egg Money Manager to forget the account.

I also have an unexpired Cahoot credit card that turned out to be dead when I tried to use it.

But I have two unused cards which one way or another acquired small credit balances, and those cards have remained active while all others have faded away.

Reactor_2

I think egg were fair as you were costing them money as a customer.

An unprofitable customer, usually remains unprofitable from my experience.

Paulgonnabedebtfree

Egg are well known for this sort of thing. A couple of years ago, they ditched lots of customers who did use their cards regularly. They were the customers who paid their balances in full each month and never paid any interest (Egg lied and said they only ditched those who they believed to be a credit risk). That I find a bit surprising as they would still have been getting a bit from the retailers. Maybe the bit from the retailers alone wasn't enough to stop such accounts being unprofitable to run. The only issue I have with that is that Egg blatantly lied and said only credit risk customers were dumped.
Personally, I have never experienced a problem with Egg but I know people who have. However, although I've had quite a few deals from them down the years, they have also received some interest from me - some at their standard rates. Indeed, most of the money I currently owe them is at about 7% until paid off.
I haven't spend on Egg for quite a while but I do owe them quite a lot from balance transfers. Once my balance is zero again (probably several years away), I don't expect them to keep me as a customer if I become unprofitable for a while. The whole industry seems to be moving this way. I had my Abbey branded MBNA cancelled about a year ago for not using it enough. Also, my GM Card will be going in January - though that is a contractual issue between GM Motors and the card company rather than anything to do with me.

opinions4u

Paulgonnabedebtfree wrote: »

Egg are well known for this sort of thing. A couple of years ago, they ditched lots of customers who did use their cards regularly. They were the customers who paid their balances in full each month and never paid any interest (Egg lied and said they only ditched those who they believed to be a credit risk).

You don't know what their definition of "credit risk" is, so to say they "lied" is something you cannot prove. For your information, I still have an Egg credit card. I have never paid them a penny in interest.

That I find a bit surprising as they would still have been getting a bit from the retailers. Maybe the bit from the retailers alone wasn't enough to stop such accounts being unprofitable to run.

They won't make much profit on these transactions alone.

But this isn't just about profit. It's about the funding of their business and the capital that they have to set aside against potential bad debts.

First of all, Citibank own Egg. There is a massive gap in the balances owed on loans and cards and the amount of money they have in savings accounts and other wholesale balances. Put simply, without government support in the USA they would be bust.

They need to close the gap between deposits and loans. They also need to make sure that some of the unused lines of credit that they have provided customers with don't suddenly get used - so those that they consider "higher risk" get closed off. It may naff off the affected customers, but it makes absolute business sense when the alternative outcome is to close the business down altogether.

Secondly, when a bank sets capital aside to cover potential bad debts, they cannot use this money to make profits because they cannot lend it. The figures below, I've made up - they are a crude example of how things work - but the concept is real enough.

Amount of capital required to be set aside per £100 of credit limit based on Egg's credit rating of the customer:

995-999 ...... £2
900-994 ...... £4
800-899 ...... £8
700-799 ...... £16

Egg may well have made a decision that anything above the £2 figure is something that their business can't afford. Their customers, especially those at the top end of the £4 tier, may feel peed off because of the outcome, but it does make sense from a cold, hard business point of view.

The only issue I have with that is that Egg blatantly lied and said only credit risk customers were dumped.

I refer you to the explanation above.

The Credit Crunch is real. It has significantly impacted the availability of credit and the price of credit. Some businesses have been hit significantly harder than others.

It is inevitable that individual customers are going to be impacted by that. As Clapton above suggests, just move on to the next deal that's best for you. Stuff loyalty!

chuckley

dint they start their first wave a couple years ago?! seems like their now gettin round to the 'excellent credit' ppl.

lisyloo

seems like their now gettin round to the 'excellent credit' ppl

It's not about risk. It's about dormancy.

In this credit crisis it's not reasonable to expect to have credit sat round doing nothing.
In days gone past it's was to all intents and purposes an infinite resource.
Nowadays credit is a finite resourse, there are capital requirements for the banks, that means for money they lend they have to have so much in the bank.
It's now finite and restricted so it's unreasonable to expect to hoard it for no benefit.

I know people get upset when they are rejected, but it does now cost the banks to provide this, both in capital terms, lost business to someone who might actually pay and all the other costs (data protection, backups, security, card provision etc.)

dunstonh

dint they start their first wave a couple years ago?! seems like their now gettin round to the 'excellent credit' ppl.

The first wave they did was based on profitability. The current wave is based on that same criteria. Its nothing to do with credit status.

manfriday_2

Haha this must be the reason egg kept me then... still not managed to make inroads into my egg cc bill so must be making them a fortune.

jamesd

manfriday, high balance, always paying on time, never defaulting would make you a perfect customer.