Credit Card Companies Prefer Customers With Debts.

Credit Card Companies may be cancelling cards from reliable customers and offering them to riskier ones to boost their profits, suggests Chairman of the treasury select committee, John McFall

Rt Hon John McFall is MP for West Dunbartonshire. 

He has previously complained that credit card companies were not being transparent. Now he says they may not be being fair to their customers. He says:-

“Are we witnessing a situation where credit card companies are taking cards away from perfectly safe customers who pay their bill in full every month on the same date for years - and giving it to customers who are riskier?”

“And if they are doing so, then their methods have to be called into question.”

This comes in the wake of Internet Bank Egg cancelling the credit cards of 161,000 (7%) of its customers.

A spokesman for Egg said: “We are sorry some customers are upset after receiving notification we are ending their credit card arrangement, but they are people we do not feel it is appropriate to lend any money to.”

However, there have been complaints from many people who say their cards have been cancelled, yet they have nil debt and repay balances in full each month. One such Egg card holder stated that:

“The letter inferred that it was due to a change in my circumstances and that it was for my own benefit”

Credit Card Companies Want Your Debt.

Credit card companies want customers who remain in debt - preferable indefinitely. OK, they sometimes get their fingers burnt by customers becoming bankrupt or doing an IVA, but by and large, debt is profitable. Very profitable. More profitable it seems than clients who pay no interest to their credit card provider.

You’ve only got to look at the advertising to see this is the case.  It seems to me most credit card adverts heavily plug the benefit of transferring your debt onto their credit card?

Many people get caught up in taking advantage of 0% interest offers thinking this is a debt management solution, but it is not. It temporarily reduces the burden of current debt, affording more debt in the short term. When the interest free period is over, the debts are larger and so are repayments. This cycle repeats until a financial meltdown is unavoidable.

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