Egg: Hit Em Where it Hurts

merlinthehappypig

Like others I have no problem with what Egg are doing if it is genuinely being done in the name of responsible lending.

Whether or not that is the case is a different matter and, not being a customer I can't comment one way or the other.

They do appear to have handled it badly. Barclaycard have clearly been doing this for some time now, but I've seen nothing in the media.

My son had one of the horrible high interest Barclaycards, I forget the correct name. I've been on at him for months to get rid of it. He had around £800 outstanding, but was spending what he paid back each month so the balance wasn't reducing. The APR was around the 30% mark.

Over the last 4 or 5 months, since the credit crunch began, they steadily reduced his credit limit. It was £1000 originally, then £850, then £450, the finally £150. Like Egg customers he was kindly permitted to continue paying the minimum.

Luckily at that point he decided the card was a waste of time. We lent him the money to get rid of the balance and he closed the account.

Whilst he wasn't paying a great deal in monetary terms in interest it was the principle that bothered me.

He was getting established at a young age into very poor financial habits and being encouraged to spend money that he didn't have at a stupidly high rate of interest. Had he been at the £1000 limit he would have had difficulty making the repayments.

The decision by Barclaycard has been a blessing in disguise. He has a better understanding of the way credit works and the cost. He has even opened a savings account, paying in each month what he used to pay to Barclaycard in interest.

Egg also lent him £5000 over 7 years when he was just turned 18 to get a car and 'encouraged' him to take out PPI as well, which they took up front. Effectively he paid nothing back for the first 15 months or so, just the PPI. He has 42 months left and the early settlement figure is almost exactly the same as the sum total of the remaining repayments.

If Egg are genuinely reviewing who they lend to then I'm all for it. If they are having problems with potential bad debts, then it serves them right.

One of the comments above implies that this decision by Egg is so they get rid of customers from whom they make little or no money. I'd imagine that most or all of the Egg customers affected pay the bare minimum each month as well so Egg will make a great deal of money from them. The customers most at risk on that basis are those of us who pay the full balance off each month at the latest possible time to maximise the free credit. Recent moves from the RBS to reduce the interest free period point the way things might move over the coming year.

Primrose

Have an Egg savings account but no ancilliary services and if such organisation are withdrawing credit services from those who are a bad debt risk, this is only sensible management and not putting my savings at risk, so I don't have an issue with this. I'm more concerned about all those of us who have credit cards for the convenience of not having to carry lots of money around and settle our bills in full every month. Will we all be ditched because we're not profitable customers as far as banks are concerned?

Aegis

Primrose wrote: »

Have an Egg savings account but no ancilliary services and if such organisation are withdrawing credit services from those who are a bad debt risk, this is only sensible management and not putting my savings at risk, so I don't have an issue with this. I'm more concerned about all those of us who have credit cards for the convenience of not having to carry lots of money around and settle our bills in full every month. Will we all be ditched because we're not profitable customers as far as banks are concerned?

I'm hoping not, as that's what I do too.

RayWolfe

I guess there is always the other unwritten condition, that you spend enough each month for it to be worthwhile to the CC companies. They do make from 1.5% to 4% for each use from the retailer.

Aegis

RayWolfe wrote: »

I guess there is always the other unwritten condition, that you spend enough each month for it to be worthwhile to the CC companies. They do make from 1.5% to 4% for each use from the retailer.

I spend about £500-600 a month, so I'd hope they see that as worthwhile! I do enjoy the cashback, and the Egg Money card is what I'm going to be using as a Stooze Pot generator over the next year or so!

Mikeyorks

RayWolfe wrote: »

They do make from 1.5% to 4% for each use from the retailer.

Something often forgotten.

I have an Egg card I use for all my online purchases. I think it's wonderful they pay all my bills on time ... afford me Sect 75 protection on all over £100 .... and just allow me to settle up at the end of the month. On top of that ... they pay me (cashback) for the privilege of being able to do all that for me! And don't get a penny for it ... other than the retail charge fees.