A senior MP has suggested that some credit card companies are withdrawing their services from people who keep their borrowing to a minimum, while generating hefty profits from those who borrow more recklessly. John McFall, chairman of the treasury select committee, said that if banks were canceling the accounts of reliable repayers while continuing to profit from those who ran up significant debts, then their business methods would ‘have to be called into question’.

While (predictably) the credit card and banking industry deny any such behaviour, there have been some recent events that may add a little credence to Mr McFall’s suspicions. Most visibly, 161,000 Egg Card customers were recently served notice that their cards would cease to be usable, with the bank implying that they were ceasing to lend to their ‘riskier’ customers.

Although the obvious inference to draw from this is that those with poor repayment records would lose their accounts, it seems that many cardholders with impeccable records were also shown the door.

Egg are not apparently alone in this, with reports of other card issuers such as Goldfish slashing the credit limits of those who earn them the least money in interest.

Apacs, the association of payment processors, said that people unhappy with their current card companies always had the option of looking elsewhere among the hundreds of cards on offer, but in these days of declining approval rates and consolidation of cards among the major players, this could be seen as possibly a little disingenuous.

This entry was posted on Monday, February 11th, 2008 at 9:28 pm and is filed under General Credit Card News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.