Egg Policy Change ?

ado

This is a link to an article in the FT...

http://www.ft.com/cms/s/0/8e2b4ece-d101-11dc-953a-0000779fd2ac.html

I like this bit:
Egg is thought to have only started to introduce risk-based pricing for customers shortly before its acquisition by Citigroup. This is common practice among card issuers globally.
Risk-based pricing allows credit card issuers to assess each customer and then offer them a variety of annual percentage rates according to their riskiness.

Egg cut my interest rate last year thereby suggesting that I was good risk yet this year they want to get rid of me.

The_Chicken

Oftenbroke wrote: »

Dear Mx xxxx

To be honest, with a name like that, I wouldn't trust you either. :doh:

LittleVoice

BlushingRose wrote: »

ok - does this mean that IF we got a letter, we would be able to keep the 0% interest we have at the moment and keep paying it off as we have been, or should we switch cards?

The agreement continues - so 0% continues if you have that. To switch would only reward Egg.

Mozette

Thanks to a large car repair bill I've had an outstanding balance on my egg money the last couple of months for the first time ever (unless at 0%). Perhaps this is why I've not had a letter.
Disgraceful way of treating people; whatever happened to 'honesty is the best policy'?

UK007BullDog

Well, who ever or whatever they used to filter their customers got it quite wrong going by the info from egg customers on this forum.

Citigroup, which acquired Egg last year from life assurer Prudential, says it has made the move after an extensive credit review of its acquisition.

Citigroup said all those customers affected had a blemished credit record – for example, they had previously missed payments or had gone over their credit card limits.

The move is the first such action taken by a UK credit card issuer.
It underlines that customers with impaired credit records will now find it harder to get credit – whether it be a mortgage or a credit card. Banks have been less willing to lend to riskier customers since the credit squeeze started because of concerns about rising bad debts.

Citigroup’s decision will hit about 7 per cent of Egg’s 2.2m customer base. It is understood a number of customers have already complained.

It is understood that Egg’s arrears performance on its credit card book had been worse than Citigroup expected at the time of the acquisition.

From this link: http://www.ft.com/cms/s/0/8e2b4ece-d101-11dc-953a-0000779fd2ac.html?nclick_check=1

Obe_one_2

Counter55 wrote: »

If you are not bothered by being labelled a high credit risk then fine, but many where it is not justified are bothered. It is not just the ‘upset’ created on the day you get the letter but the potential damage to their ability to get future credit. That is personal.

I think many will have a reasonable legal case for damages but will have a very good case to the FSA appeal scheme who I expect will see this kind of mass labelling of customers as a very bad business practice.

At the very least Egg should be saying what is going to be showing on the credit file if the account is blocked but minimum payments are being made - will the balance be above the available credit limit?

There won't be any damage done to peoples credit files, it will just show that an account has been settled. It doesn't show if the account has been terminated so it won't have any detrimental effect.

If anything it could have a positive effect, due to there being 1 less account where there is potential to run up further borrowing.

Also I don't think there'll be any sort of case to answer regarding any kind of damages because all credit providers have it in their terms and conditions that they can cancel the agreement at any time. The same will be the case with the FSA.

Obe_one_2

trisontana wrote: »

Here is a very interesting article from the Banking Times. As you can see, they have seen behind Egg's "high risk customer" statement and found the truth. It's also interesting to see what a mess Citi are in.

http://www.bankingtimes.co.uk/02022008-egg-drops-unprofitable-customers/

I wouldn't exactly say they have "seen behind" the high-risk customer explanation.

"Reports from angry consumers suggests that it is actually those who pay no interest on their credit cards through paying off their balance each month, who may have been the main target"

The key word there of course is 'suggests', all the banking times are doing is reporting consumer opinion.

The important bit of this story is the bit at the bottom about the fact that it doesn't make sense for Egg to cancel the business of it's good customers.

red74

From the FT item in BullDogs post above -

"Citigroup said all those customers affected had a blemished credit record – for example, they had previously missed payments or had gone over their credit card limits."

This goes a bit beyond calling somebody's account "risky" or "not being in accordance with our credit strategies" - both of which are vague enough to mean any number of criteria, and by the looks of a lot of the posts on here, not the truth either. If this is a case of misquotation by the FT, I would be expecting Citigroup to be demanding an apology from them. Because otherwise Citigroup could be seen as lying about a significant number of their customers. As if this whole fiasco hasn't been a total PR scr*w-up as it is. If I was Egg's media relations manager I might be scanning the papers for jobs in McDs right now.

Obe_one_2

TSx wrote: »

To those saying it won't affect the credit record, are you sure?

Surely, the card will now have a £0 limit - so it may say balance £975, limit £0 which is obviously a bad sign.

Or will they do it by just maintaining your limit with the CRA's?

Positive. Your file will still show the credit limit as it was when the account was terminated.

The account will just be a repayment only facility.

Obe_one_2

chicken_legz wrote: »

What is the point of claiming back the cost of looking at your credit file? The chances are that people who have access to it pay monthly as a sub not a one off charge.

Its even still free for 30 days to look at your credit report online if you are not signed up! So saying that is totally pointless.

I can't quite get my head around why people continue to pay a monthly subscription to the likes of Credit Expert et al when it only costs 2 quid each time you request a copy.

At around 5.99 a month for a subscription it really doesn't make any sense. How often do you seriously need to check your file??