Low-risk credit card holders are facing fees, credit limit cuts or even account closure as credit companies seek to cut costs and increase revenue.
Despite the recent fiasco over the ditching of 160,000 loyal customers, and the resulting bad press, Egg remains one of the most widely recognised credit card brands in the UK today. Even though nowadays it’s offering is less than spectacular, it is still a fairly popular card - in no small part to the widespread publicity it has received over the years just because of its name. After all, what blogger or journalist can resist showing off their writing prowess by producing a teeth-grindingly awful pun as the headline?
The Office of Fair Trading (OFT) has again criticised card card issuers for making their products too complicated and hard to compare. The chief complaint was that the way a card’s APR was calculated was done in 12 different ways among the top 20 card providers, effectively making APR meaningless as a comparison point when choosing a new card.
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’.
New figures from payments association Apacs reveal a record high for spending on plastic, with a total of £321 billion spent in 2006.The amount includes £195 billion spent on credit cards, with the rest accounted for by debit cards which continue their strong rise in popularity.
Plastic now accounts for nearly a third of all payments made in the UK.
The Laura Ashley chain of fashion and furniture shops has been caught up in yet another unsolicited credit cards row after its storecard partner GE Capital sent out thousands of credit cards, and the PINs needed to use them, to the store’s customers without the prospective cardholder applying for them.
Thousands of Egg Card account holders will have to pay significantly higher rates after a review of customer risk levels was conducted by the company. With just a week’s notice, some customers will now have their APR ramped up from the current rate of 16.9% to a whopping 21.9%, which just about takes the egg card into the territory of a ‘bad credit’ credit card rather than a general purpose one.
Citigroup have quadrupled their UK customer base to 4m with the acquisition of online bank Egg, in a deal which saw them pay £575m to former owners Prudential.
Card issuer Capital One have been strongly criticised for sending out unsolicited credit card cheques to an undisclosed number of customers, with debt campaign group Money Advice Scotland saying they plan to raise the matter with the Banking Code Standards Board (BCSB).
Image-conscious credit card carriers may soon have a dramatic new look in their wallets after 3M announced the development of a totally transparent material that can be used to make credit cards.