Badge Money Blog

Not so good Egg

Why is the internet bank raising credit card rates for good customers, asks Jill Insley

Barclaycard used to be the credit card I loved to hate. It charged high rates compared to other credit card companies, and even when the rate was lower it had other tricky catches in the terms and conditions that meant you would end up paying through the nose.

In contrast, the likes of Egg and Capital One offered lovely 0% balance transfers for a year at a time, followed by a low interest rate that seemed to last indefinitely so you didn't have to worry about switching your card all the time. How things have changed.

Today Barclaycard announced that it would be freezing or cutting its rates for existing customers, and offering a helpline for those who are struggling with payments. It is actively trying to help people who are in debt.

Meanwhile, Egg has emailed its customers to tell them their rates are being hiked by up to 5%. Mine is going up to 21.9% from 17.9%, while one of my colleagues has seen hers increased to 26.9% from 21.9%. It is not the first card provider to do so - last week Capital One announced it would be raising rates by similar amounts from March.

Egg is still promoting a 0% balance transfer deal (with a 3% transfer fee) which runs until April 2010. I would like to say don't touch it with a barge pole - just look at how the company treats its existing customers - but there aren't so many decent 0% transfer offers out there now and you may need one.

If you do apply, just make sure that, like my colleague who has seen her interest rate go up to 26.9%, you are in a position to switch to another cheaper card when the 0% deal comes to an end - take a look at our best deals link at the top of the page for current credit card offers.

I know all about risk rating, and the fact that credit card interest rates are not determined by movements in the base rate, but the riskiness of the borrower. My balance has gone up and down depending on the state of my roof/cooker/car and other big purchases, but I have never missed a payment (it's on direct debit to make sure I don't) and I have made Egg lots of money over the years. So why am I being charged more now? I'm off to find a new credit card right now - what are your plans?

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