Egg drops unprofitable customers

by Brian Turner

Story link: Egg drops unprofitable customers

Internet banking service, Egg, has told 161,000 customers by letter that they will no longer be able to use their credit card after 35 days time.

Egg - recently bought by Citigroup - insisted that the customers it was dropping were “high risk”.

However, reports from angry consumers suggests that it is actually those who pay no interest on their credit cards through paying off their balance each month, who may have been the main target.

If this is the case, then the move by Egg is surprising because customers who pay their credit cards regularly are more likely to have strong assets with the company.

If Egg were to see a significant number of its affected customers - currently 7% of its total - remove their assets from Egg, it could significantly impact the company’s balance sheets.

Citigroup has already lost billions through trading in downgraded debt. And yet if Egg were to focus on customers paying for debt, rather than providing assets to leverage, the company may damage their own liquidity.