As news that Egg have contacted up to 160,000 of their customers with threats to cease their credit lines unless they settle at least some of their debts, many credit card holders are running scared and wondering why egg have taken this action. Can they do it? Is it right?

Unfortunately for many Egg credit card holders, and other Egg financial customers, the company are well within their rights to carry out the recent threat of action. They had been in contact with the regulatory authorities prior to their recent communications and were informed that they were well within their rights to do this. The action itself has prompted an array of responses from the financial and consumer markets with many applauding the action, but some suggesting that they are stripping out “higher risk” customers at a time when they will have trouble refinancing their arrangements.

While Egg was taken over last year, their new owners seem to have taken some time to come to grips with the UK credit card market which is among the more competitive in the world. As and when these 160,000 “problem” accounts are sorted out there will no doubt be an immediate increase in the credit rating for the Egg operations. This will lead to better lending terms for the company and immediately impact upon their bottom line profitability – leaving many customers to fend for themselves.

There are some concerns that because one of the larger credit card companies has broken rank there is a distinct chance that others will follow, knowing that much of the flack has already been targeted at Egg. It has to be said that on one hand the company should be applauded, but on the other the decision to take such action seems to have been taken rather quickly with very little thought for their customer base.