Egg Policy Change ?

ado

Google is listing 131 related articles to this issue:

http://news.google.co.uk/news?hl=en&q=egg&um=1&ie=UTF-8&ncl=1127441493&sa=X&oi=news_result&resnum=4&ct=more-results&cd=1

Given that a couple of people in this thread have questioned Egg and Citibank's liquidity I wonder how much money would have to be withdrawn from Egg for it to have an effect?

heppy23

ravenk wrote: »

"If everyone only stoozed on a companies cards or only paid of their whole balance each month the company would struggle to make any money.
"

And the 3% they charge the retailer ?

3%? Our company turns over about £600k a year and we only pay about 1.3%.

As far as I know that mainly goes to the card processor and visa/mastercard.

I'm sure the credit card company get a share of that but it won't be a lot.

heli_pilot

POWER TO THE PEOPLE
(CUSTOMER POWER)

http://news.bbc.co.uk/1/hi/business/7224268.stm

MPs are now asking for Egg to be investigated
hooooooooooooooorrraaaaaaaaaaaaaaaaaaaaaaay:j

shaggy

a pathetic attempt by Egg to cut out its non-profitable customers. The strange thing is, I've had my Egg Mastercard for over 2 years, and have rarely used it, but for the past two or three months have racked up balances of nearly £1000 a month. I always pay my full balance off every month via direct debit so I can't imagine Im a hugely profitable customer for Egg, so it's all the more surprising i've not received any such letter about being dropped.

I am almost tempted to move ,my custom away in protest anyway, but to where

br1zer

Egg, in invoking this policy are bullying some very vulnerable people.

Fortunately, I closed my egg Visa a long time ago...but I have a savings account with them.

In protest of their draconian methods, I have now withdrawn all of my money...not a great amount admittedly, in three figures but a principle is at stake here.

I will fully close the account once they have paid the outstanding interest I am due.

I hope others do the same......

dag_2

Thanks for the responses everyone. I must say, though, that the idea that staff can only give scripted replies isn't very reassuring, although of course I would strongly disapprove of staff members perpetuating rumour and speculation.

Going back to the Banking Times article which suggests that the incident could lead to liquidity problems: I can't help wondering if worries about liquidity might be one of the things that sparked this off in the first place.

After all, if you don't think you're going to be able to pay out on the savings accounts, then it absolutely makes sense to cut the limits on credit lines that aren't being used.

There's no point in cutting the limits on credit cards that are already maxed out, since this isn't going to get the bank any money back any earlier. And besides, it could jeopardise the continued revenue line.

But there is a point in cutting limits on cards that are practically unused. Or even withdrawing those cards completely.

However, if that's really what is going on, then you can't blame Egg for being tight-lipped about it. A bank is never going to admit to liquidity concerns if they can help it, because if they do, then they cease to be a "proper" bank in the customer's mind, and you end up with a Northern-Rock-type situation. The whole point of banks is that they're supposed to be safe.

It's a major taboo for banks. It's far better for a bank to blow raspberries in the face of its customers (like Egg have just done) than actually admit there might be a liquidity problem.

Mind you, even if that was true, it still doesn't explain the existence of the 35-day notice. I know that a previous poster has said Egg's T&C's means they have to serve notice, but I still think that it may be possible to stave off a liquidity crisis simply by freezing some of the credit card accounts, and pretending that it was necessary in order to "prevent fraud". No-one's going to be any the wiser, are they?

It might be an idea to see what happens to Citigroup's shares when markets open on Monday.

I know you should never rely on Wikipedia for information, though, but apparently Citigroup is "the largest company in the world" with US $2.4 trillion assets. Of course this doesn't tell us how much of their assets are cashable, but I suspect that a liquidity crisis is still very unlikely.

And if a few Egg Savings customers get the hump and choose to pull out, Citigroup can probably afford to withstand the loss, as I don't suppose Egg accounts for a particularly large part of Citigroup's operations. Besides, there's also the UK deposit guarantee.

But I'm completely clueless about this sort of thing.

So I'm going to shut up about liquidity problem theories now! I promise! I'm still interested to hear what people say, though.

DifferentFromTheNorm

heli_pilot wrote: »

POWER TO THE PEOPLE
(CUSTOMER POWER)

http://news.bbc.co.uk/1/hi/business/7224268.stm

MPs are now asking for Egg to be investigated
hooooooooooooooorrraaaaaaaaaaaaaaaaaaaaaaay:j

I'm in no way defending what Egg has done because I don't think they've gone about it in the right way. But, I fail to see what there is to investigate.

If Egg choose to close 7% of it's customers credit cards then as long as they follow the T&Cs then they can do that. Every customer has agreed to T&Cs that state Egg only has to give 30 days notice, Egg are giving 35.

None of what Egg is doing will have an adverse affect on people's credit files. The cards won't show as 'closed/settled' until the balance has been cleared in full and no other lender will see that it is Egg that has closed the account. The quotes from Experian on the news reports also highlight their belief that this will most likely have a positive affect rather than a negative affect in gaining future credit.

So, although it's obviously a massive inconvenience to some people it's up to Egg who they lend money to. It's not like the government/authorities will force Egg to lend their money to customer's who (for whatever reason) they no longer wish to give that facility to.

If it wasn't for the number of cards totalling 161,000 then I doubt this would even make the news let alone get the attention of MPs.

MoneyMadness_2

heppy23 wrote: »

3%? Our company turns over about £600k a year and we only pay about 1.3%.

As far as I know that mainly goes to the card processor and visa/mastercard.

I'm sure the credit card company get a share of that but it won't be a lot.

It all depends on the merchant. If the merchant is charged 2%, 1% will go to the acquired (eg barclaycard merchant services who the merchant uses to process card payments) and 1% goes to the card issuer (egg in this case). For larger merchants like Sainsbury's it will be smaller - eg 0.5%

Spark

When companies are taken over, it's always the customer who pays for it. Usually it starts by staff cuts, then the customer services goes down. Abbey is a good example of it, and even though I do not own an egg card, it is my point of view that other card companies are scrutinising the Egg situation and if ever Egg can get away with it and without much financial damages the other credit card companies will follow suit, but if enough people are pulling out of Eggs and show their discontent, the other companies might think twice before doing the same thing.
Marbles have been taken over not long ago, I suppose it'll take a few months before we see the real changes to the terms and conditions, and I think it will be at the disadvantage of the consumer, as usual.
Tonight I saw a new Add for Egg visa on ITV I think, they've swapped the guinea pigs for a dolphin, so if they still can spend millions on an add to try and attract new customers, they certainly are not on the verge of bankrupcy.
With what I know now, I would never apply for an Egg card, cute dolphin or not. I think they have shot themselves in the foot.

mrme

I would say I am a pretty high risk customer but they have confirmed that I am not affected, obviously think they will be earning £££ from me in the future I guess. I always pay off in full each month though but I have a tiny limit anyway.Who knows what they are thinking