Seen on the AP wire:
Egg, the Internet bank owned by Citigroup (NYSE:C - News), will withdraw credit cards from 161,000 customers following a risk review, a spokesman for Egg said on Saturday.
The company has given seven percent of its credit card customers 35 days’ notice that it was ending their card agreements, he said.
“The credit profiles of affected customers had deteriorated between the time they joined Egg and the acquisition (by Citigroup) in May,” Egg said in a statement. “The decision to end these customers’ agreements was taken after conducting a one-off, extensive risk review of our (customers)…”[...]
The customers affected will not be able to use their Egg credit card once the notice period has ended, although they can continue to make minimum monthly repayments or pay up in full.
Of course, the concept of having your credit card yanked by the bank horrifies some folks. It’s all too easy for me to imagine the screams of horror from consumer advocates that the mean, evil bank would yank the credit card from a poor, hapless soul in this economy where plastic is a virtual necessity.
I can even imagine some of those consumer advocates being the same ones who bemoan the practice of “predatory lending”.
Is this right? Do we really need to be protected from ourselves, or is this a basic violation of our consumer rights? As a consumer advocate you think I’d be torn, but I think the general public have been spending without prejudice for way too long and the results are showing. Maybe we really do need a big brother figure to watch over us when things get this out of hand.
Several other banks in the UK are soon expected to follow suit, and I’m sure the US banks are watching very closely. Tired of getting burned by non-payers, bankruptcies and credit-card shufflers, the US banks could soon be striking back at consumers who are consuming way more than they can afford. It may just be one of those shocks to the system that America needs. A basic right, a credit card, could soon become much more of the privilege it used to be. And about time, too.
