Internet bank cancels thousands of credit cards

[boztopia]

From the AFP:

The move has hit seven percent of Egg's two million credit card holders. It is not asking for immediate balance repayments or changing terms and conditions. One angry customer is Gillian Cox of Farnham, who told the BBC that she and her husband have always paid off their balance in full each month. "We are retired, no mortgage, no

Comments

[anvilchorus]

Its not like the CC companies dont make money off the deadbeats. Even a guy who pays his off every month, the CC cards still make money off of the point of sale from the companies who allow use of those cards.

So this renders me confused. They are no-risk. They still make money off these people. Why would they come down on them?

Very true

[boztopia]

Thanks to interchange fees, even the use of a credit card for the smallest of purchases (something companies are quick to encourage) brings in some extra dough for the bank.

It could be that the so-called "higher risk profile" consisted of people who didn't use their cards for POS purchases. :)

Re: Very true

[anvilchorus]

Then I can understand it better. I would hope that it would be marked on a credit record that this wasnt an issue of them defaulting on anything....

But it costs the CC companies money to carry your account, and if they arent making any money off you, then they're actually losing money because of you.

[rumpleteazaer]

I am not surprised. I currently have two credit cards with low credit limits. I have made larger than minimum payments each month and kept them nearly paid off. yet, I have paid off old debt and yet, some how, my credit score is lower now than before. And I am still getting credit card offers.

WTF?!?

[sunfell]

I expect that this is just the beginning. I would not be a bit surprised if some of the banks suddenly decided that their debtors had to pay their cards IN FULL immediately.

I have some debt- need to trim it down a bit, because getting a mortgage is not as easy- they don't want you to be maxed out, but they don't want you to have empty (paid off) accounts, either. I heard somewhere that the magic number is 35%.

It's a sad world where 'deadbeats' are considered 'high risk'...

Right

[boztopia]

It's a serious head game. Creditors want to see you using credit, because that seems to communicate stability (I'm not sure why), but not too much, or else you're a risk.

I never thought we'd live in an age where being financially accomplished enough to pay off all your debts would actually work against you.

Re: Right

[principia]

I never thought we'd live in an age where being financially accomplished enough to pay off all your debts would actually work against you.

Stupid but true... at least until the recession bottoms out and the institutions will be happy with people who can pay their freaking bills.

Re: Right

[sunfell]

I fear that we'll eventually end up in a two-tier culture- divided into solvent vs. debtors.

I want to be on the solvent side of the line. Sad thing- I was briefly in that wonderful sweet spot where I had more in savings than what I owed- by a goodly chunk- then my old car died and I got right back in the hole again with another car note.

Sigh...

[principia]

Some credit card companies (like the two with whom I currently have cards) seem to acknowledge the fact that they still make money off of you if you use your card for retail purchases - the one I've never paid a lick of interest on and never gotten any guff, and the other was no-interest for the first umpteen months so long as I had at least 2 retail transactions per month.

I try not to be a useless twat about using my cards at retailers (the people who charge a $2 coffee to their Visa, I'm looking at you), but other than that I try to keep my cards pretty active so I don't run into problems due to my habit of keeping the cards paid off or at least paid well over the minimum payment.

[secret_stuff]

Bank Card companies are strongly pushing cashless. Look at all the VISA check card commercials?

I'll admit I've made a good number of $5 or less purchases with a check card, because I have simply gotten out of the habit of carrying cash.

I look at it this way, do the retailers want some low purchases from me, or would they prefer no business at all (because I'm not carrying cash)? I usually buy a bit more than I really want in those cases so its not a ridiculously small charge.

[bentrazor]

I hate credit cards for this reason. I used a visa check card for everything until 3 years ago, when I wanted to get a celphone. Verizon wanted a $400(!) deposit since I didn't have "proper credit". Nevermind I had a previous celphone, a car and apartment for however long I paid the bills/rent on, no no, proving I was financially stable meant spending money I didn't have. Swell.

So now I have a credit card.

and I ended up going with Nextel.