Credit card provider Egg has hiked up the interest rate on its Egg Visa and Egg Money MasterCard for around half a million existing customers.
With APR increases of up to 7% for existing customers, Egg is moving sharply against recent reductions in Bank of England interest rates. In an email to one customer, Egg blamed, among other factors, ‘the current and anticipated future economic environment’ and ‘our own internal costs of providing credit, including funding costs’.
Get-out clause for those who can
Egg has offered a get-out option for those customers unable to pay off their bill in full (or unwilling to pay their new inflated interest rate) – you can cancel your Egg credit card but continue to pay off your existing balance at your old rate. However, you won’t be able to use your card for new purchases.
Switch to a better credit card
Which? encourages all existing Egg customers who have been hit by this shocking increase to look elsewhere for a new credit card. For the best credit card for your needs, see our .
If you can’t get a new credit card and can’t afford to pay off your Egg bill in full, make sure you contact Egg before the deadline it has given you to lock your account in at your old rate.
Martyn Saville, Which? credit card expert said: ‘The core message from Egg is clear – pay up or go elsewhere.
‘Egg is still advertising the same interest rate of 16.9% to new Visa customers as it was a year ago, suggesting it may be trying to clear out a swathe of non-profitable or higher-risk existing customers to make way for new ones.
Industry rules state that two thirds of customers accepted for a new credit card must be offered the advertised variable rate.
Unfortunately, this doesn’t apply to existing customers, many of whom may be feeling short-changed at a time when getting a new credit card is more difficult.
Martyn Saville continued: ‘Blaming ‘the current and anticipated future economic environment’ for such gigantic hikes in customers’ interest rates is arguably disingenuous.’
‘Egg’s explanation that ‘we have capped any increase to 7%’ is astonishing. Bank of England interest rates are at a low of just 1% and 3-month Libor (the rate at which banks lend to each other) is at 2.14% this month, compared with 6.31% last October.’
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