Credit Card issuers ‘hounding’ out 1.8m customers
August 27th, 2008 | by Lynn Connelly |
Some UK credit card companies are said to be ‘hounding’ nearly 1.8m responsible customers in the last year in order to force them to give up their cards.
The customers targeted are those who always pay their credit card bills on time, but who are not generating the card companies any revenue because they don’t have large debts. These clients are being ‘forced out’ by the companies using account closures or credit limits reductions.
The shock findings are revealed in a study by price comparison website uSwitch. It reveals that among over 2000 adults with credit cards, 8% of them were being subjected to these profit-hunting methods over the last year, which is the equivalent of 2 ½ million credit card users.
Scandalously, the credit card providers had no genuinely valid reason for forcing out over 70% of these customers given that over half of the customers ditched used their credit card regularly and made at least their minimum payment while another 1/5th paid their outstanding balances in full each month.
Only 16% of those customers actually deserved to be dropped by the credit card provider because they had exceeded their credit limits or had missed more than one payment.
These findings contradict the assertions made in the last year by credit card providers that they would not be ditching low-profit customers.
Egg is one of the worst offenders and faced mass consumer anger after it cut off credit to over 160,000 customers earlier this year.
This situation has come about simply because responsible credit card users don’t earn their credit card provider as much money as those whose debt becomes unmanageable and accrues a lot of interest.
‘This is Money’ announced earlier this year that credit card providers have been slashing unprofitable customer’s credit limits to just £100 more than their existing balances, without giving them any notice or reason why.
