Like hundreds of thousands of people in the UK I have an Egg credit card. I have had it for some 10 years during which I have always kept my nose clean, never defaulting on payments and by and large keeping the balance low.
In February, I like many others was informed that the APR associated with my card was increasing by 5% to 21.9%. There were statements from Egg about changing rates in line with market forces, cost of lending etc but this was really a way of crudely weeding out what they thought to be risky lenders. A week ago I (and many others) received another notification that the APR was going up another 5% to 26.9%, that is a rise of 10% in 8 months. We have the option of accepting the rate rise or cancelling our cards and paying off the balance at a frozen interest rate.
Soemwhat incensed, I started a dialogue with Egg customer services. Below is a copy of that dialogue with names removed to preserve anonymity. This is a lesson in how not to serve your customers! The messages are in reverse chronological order. You will see that at no point are any of my questions answered, I received restatements of Egg's policy in standard format. A great example of efficiency vs effectiveness. Very efficient but totally ineffective!!
Dear Derek At Egg we regularly review our rates and we'll consider a number of factors such as the management of the account since it was opened, customers' credit profiles, our costs for providing credit and the current economic risk environment. In every review, rates can decrease, increase or stay the same. In addition, we take into account the information provided to the financial industry by external credit reference agencies. To get a copy of your credit file you can contact Experian www.experian.co.uk\creditreport or Equifax www.equifax.co.uk directly. Here are a few suggestions on how to improve your credit profile:' Make sure you always pay at least the minimum payment, on time to us and other creditors.' If you can, make payments that are more than the minimum amount you're asked to pay, and reduce your overall level of debt.' Close cards you no longer use.' Don't apply for credit that you don't actually need or will not use.' Regularly review your credit report to make sure it is correct.' Make sure you're on the electoral register. As mentioned before, your credit profile is just one of the factors we use to determine your interest rate. We also take into account our own internal costs for providing credit and the current economic environment to determine our customers' interest rates. I hope this message has helped to clarify the query you had. Regards xxxxxx Internet Customer Services
-----Original Message-----
Date: 07 Sep 2009
Time: 08:45
Subject: Interest rate changes
So, just to be absolutely clear: - You wish to increase my interest rate by 5% for the second time in 8 months- You will not tell me why you are doing it- You will not tell me how I can get myself into a situation where I could benefit from lower rates- The only information that you are prepared to provide is your standard policy wording and that fact that you are not prepared to divulge further information- Given that no sensitive or inaccurate information has been divulged, you have no objection to the publication of my dialogue with Egg to show show badly customers are treated
-----Original Message-----
Date: 04 Sep 2009
Time: 16:46
Subject: Interest rate changes
Dear Derek Scoring of accounts is a complex process taking into account many variables from how you have run your account and information available to us from credit reference agencies along with the current economic climate. If you need any further assistance, please don't hesitate to contact me. Thanks for your message. Regards xxxx Internet Customer Services
-----Original Message-----
Date: 04 Sep 2009
Time: 14:39
Subject: Interest rate changes
It is bad enough that you claim to be able to change the terms of card holders agreements as you see fit but how come you cannot even tell individual cardholders why those decisions have been taken? Even credit reference agencies will divulge information given payment. The attitude of Egg towards its cardholders is nothing short of blackmail. Since you have actually given me no information other than the fact that you will not give me any information I assume that you have no objection to this being distributed in any way that I see fit?
-----Original Message-----
Date: 04 Sep 2009
Time: 13:52
Subject: Interest rate changes
Dear Derek Unfortunately, I can't provide you with account specific information in regards to why we have increased your rate specifically but it is due to the factors we have informed you of. If you have any further queries please contact me. Regards xxxx Internet Customer Service
-----Original Message-----
Date: 03 Sep 2009
Time: 18:42
Subject: Interest rate changes
Your reply clearly states the policies of Egg but does not give me the information that I require. I wish to know what aspects of the management of my account have led to the application of two 5% interest rate increases within 8 months. What would I need to be doing in order to have a better rate with Egg? Surely this is likely to make sure more people default on loans rather than repay them or keep up with minimum payments? I also fail to understand how a rate of 26.9% reflects the commercial cost of borrowing and how you are following industry standard principles when card providers such as Cahoot and RBS are still charging a fair and reasonable 16.9%.
-----Original Message-----
Date: 02 Sep 2009
Time: 12:43
Subject: Interest rate changes
Dear Derek Thanks for your message, and I'm sorry to hear about your concerns. The interest rates charged on our cards is determined by many factors and includes:* Customers' credit profiles and how accounts have been managed since they were opened.* Our costs of providing credit in the current economic environment. We review all our customer interest rates on a regular basis, taking the above factors into account. As a result, we may increase or decrease the rates on some of our accounts. In determining the interest rate for an account, we've followed the industry principles in relation to re-pricing and offer our customers the ability to avoid being affected by the increase by choosing to cancel further use of the card and pay off any outstanding balance at their existing interest rate. We believe that the option to cancel the use of your card any time before 3 October 2009 is a fair one as it allows you to pay any outstanding balances at your current contractual rates until those balances are repaid in full. Thanks for your message. Regards xxxx Internet Customer Services
-----Original Message-----
Date: 01 Sep 2009
Time: 18:21
Subject: Interest rate changes
I am slighlty dumbfounded at the latest interest rate changes. This means that the APR applied to my account has risen 10% in less than 1 year. Can you please explain the factors that have led to this. I must admit that I am paying only the minium payment but have still paid off over £1600 in the past tweleve months whilst still paying teh interest and I have never defaulted on a a payment. An explanation would be greatly appreciated.
