Credit cards are to be withdrawn from 161,000 Egg customers who it believes pose an unacceptably "high risk".

The internet bank is writing to 7% of its customers to give them 35 days' notice of the withdrawal.

 

Cardholders will be able to continue making minimum monthly repayments on their balances but will not be able to spend any more after the deadline.

 

The move follows a "one-off" review after Egg was bought by US-based Citigroup for £575m last year.

 

In a statement, the bank said it was not demanding immediate repayment of balances or making any changes to customers' terms and conditions or their interest rates.

 

The 35-day notice period starts on receipt of the letter, which also provides details of how to appeal against the decision.

 

Risk profile

 

Letters will be followed up with e-mails to customers.

 

Egg was sold to US banking giant Citigroup in May 2007 by life insurer Prudential.

 

It prompted the review, which picked out customers considered to have "a higher than acceptable risk profile".

 

Angela Knight, chief executive of the British Bankers Association, said that Egg's action was "a sensible way of looking after a business".

 

"Whilst it is lovely to spend, it is the paying back that is always the difficulty. It might seem a bit hard to say to people 'You do need to stop spending' but it does actually make real sense so to do."

 

The 161,000 customers whose cards are being withdrawn had had a deteriorating credit profile since they signed up, according to Egg spokeswoman Rachel Roe.

 

This could include those who have missed repayments or exceeded their credit limit.

 

But the description has angered some customers who told the BBC that they had received a letter informing them of the withdrawal, despite having an excellent credit history

 

They claimed that by making repayments strictly every month, Egg was not making a profit from them in interest.

 

Gillian Cox, of Farnham, Surrey, said she was "absolutely furious" to learn that her credit card had been cancelled in what she described as an "unbelievable arbitrary action".

 

Mrs Cox said she and her husband are "retired, no mortgage, no debts" and "always paid the balance off in full each month".

 

She added that she had contacted Experien who informed her that she was marked as having an "excellent" credit rating, "thus totally negating Egg's claim that this measure is about credit risk".

 

Egg's decision could be a signal of the tightening credit market, with consumers facing more difficulty in repaying debts and cutting spending.

 

But Ms Roe said the appraisal was the result of an unusual set of circumstances owing to the change of ownership last year.

 

"There are no plans for a future review," she said.

 

http://news.bbc.co.uk/1/hi/business/7222336.stm

"Risky" in terms of the bank's profits, if you pay the card off in full every month, then they can't charge you interest, hence no money for the shareholders.

 

*Hopes Halifax doesn't go down that route of kicking of customers who pay their bill off in full every month*

I am not shocked by this.. in fact I am suprasied it has not happend already......... !

 

Poor people that work in their call cetners though.. I could imigine the abuse the customers must be giving them.... !