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By Reno Charlton
News Editor
In a recent announcement the online lender Egg shocked industry professionals and customers alike by announcing that it was withdrawing the credit card facilities of over one hundred and sixty thousand people.
Egg claimed that those affected were customers who had let their credit rating slip, and were therefore an increased risk in what has become a volatile financial climate. But after scratching under the surface some people are beginning to wonder whether this really is the case.
After making the announcement about the withdrawals of accounts officials from Egg stated "We are sorry some customers are upset after receiving notification we are ending their credit card arrangement, but they are people we do not feel it is appropriate to lend any money to."
Originally Egg had stated that this was due to their falling credit ratings, but then said that the decision was regardless of credit status, which seemed to contradict the first statement.
Customers for profit
One MP has now expressed concern that banks and credit card companies are going to start closing down the accounts of the wrong customers in a bid to try and make more money.
Many of the people affected by the Egg decision were bewildered because their credit was and always had been excellent. However, John McFall, the chairman of the Treasury Select Committee, recently stated that bank appear to be closing the accounts of those with good credit and offering finance to those that do not repay balances in full so that they can make a profit from the interest.
Mr McFall stated: "Are we witnessing a situation where credit card companies are taking cards away from perfectly safe customers who pay their bill in full every month on the same date for years - and giving it to customers who are riskier? And if they are doing so, then their methods have to be called into question."
Fair or unfair?
Industry officials at APACS however, have denied the claim. One spokesperson from APACS said: "A credit card company is a business and it will always be looking to do one of two things: either making sure that it's lending money responsibly to people who can afford to repay any money that they're borrowing, and secondly, as a business that needs to make a profit, deciding whether it wants to give you and I a card."
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