Egg taking a beating yet again

Posted in 'Personal Finance' by Richard Catlin

12 February 2009

Egg have once again infuriated card holders by announcing that it will increase interest rates for over half a million customers from 1st March.

Hot on the heels of the outrage it caused last year when it closed 161,000 accounts deemed to be ‘too risky’, this latest move will see the typical APR increase by as much as 5%.

550,329 customers will see their interest rate increase by an average of 4.39%, and although Egg argue that a further 120,431 will actually see their rates drop, the move has still provoked controversy.

The online bank, which was acquired by troubled American giant Citigroup in 2007 has written or emailed those customers affected, following "a re-assessment of their credit profile".

In response to criticism levied at it for increasing rates at a time when the UK base rate is at a record low, Egg blames the higher costs involved in Interbank Funding (LIBOR).

Following Government efforts in November 2008 to better protect consumers, one part of the move has actually been praised. Any Egg customer not wishing to agree to the terms of the rate increase can instead choose to cancel their card and retain their existing rate until their balance is paid off. At that time, the account will be closed for good.

Credit card giant Capital One announced similar increases to interest rates on their cards earlier this year, though Barclaycard have bucked the trend by cutting some rates. We’ve also received word from a number of checkmyfile customers that they have seen the limit on their credit cards slashed unexpectedly.

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