So Egg have decided to cancel their credit card agreements with over 160,000 customers which is an intriguing development.

They aren’t asking these people for the money they owe (if they do owe anything at the moment), they are simply cancelling their cards so that they can’t spend any more but can continue to repay any debts at a rate they choose.

Is it just me who finds this a bit worrying?

I’ve been with Egg for a few years now, both with a loan and credit card, and the thought that these people don’t seem able to give out any money at the moment is a concern.  It’s the only reason I can think that they would have done this - basically they seem to have gone through their system and mainly picked out people who spend a bit on their cards from time to time and decided they can’t afford to have them as customers any more.

Normally this type of person would be a dream client to a bank, as the customer has to not only pay back the money they have borrowed but with a large chunk of interest added on top for good measure.

Egg are blaming the credit rating of the customers in most cases, but a lot of people writing on other sites claim this is simply untrue - and in fact a lot of them appear to be the kind of people who use their card and then pay it off as soon as they get their statement.

To a bank these are probably not seen as being their best customers as they are basically using their card to get a very short-term interest free loan as they buy things and then pay for them a month later - Egg essentially has to pay the money up front and then gets it back later but with no interest on top if it’s repaid in full.

So why would they want to get rid of these people other than for the simple reason that Egg can’t afford to be lying out of this money any more?

Of course after the Northern Rock fiasco last year, banks and other financial institutions will be trying their best to play things as safe as possible so it may be that this is just a minor blip, but then again maybe not.

It’s heralded as the start of the credit crunch hitting over here, who knows what is going to follow.