Egg accuses card rivals of 'double standards'

Online bank Egg has attacked rival credit card providers for preventing bargain-hunting borrowers from switching to some of the best low-interest deals, writes Simon Hildrey.

According to Egg, rivals such as MBNA and HBOS which operate credit cards for other companies do not allow people to switch between these cards and take advantage of attractive introductory rates, which can be as low as 0%.

Jerry Toher, managing director of Egg, said: ‘Considering the Consumers’ Association has recently voiced concerns over the transparency of credit card providers, we are surprised that some of the UK’s key card issuers appear to have these kind of double standards.’

He added: ‘Consumers shopping around for good deals need to ensure that they are not going to be inconvenienced or out of pocket by hidden restrictions on their chosen card.’

Egg, for example, said an Abbey National credit card holder cannot switch a balance to a Virgin Money card at its special rate of 0% as both companies’ cards are supplied by MBNA.

The online bank added that a Halifax customer was not allowed to transfer his balance to Bank of Scotland’s credit card to take advantage of its 0% deal. Both banks merged to form HBOS last year and the bank does not want its two operations competing with each other.

Customers can only gain these introduction deals by paying off their debt, cancelling their credit card and then applying for a card with a different bank.

‘Card customers who have balances with these offending providers, keen to transfer to better deals, could find that some high-profile cards on offer are out of reach,’ said Toher.

Egg is offering new customers with balances a 0% interest rate until 1 January 2003. From that date its standard rate of interest will apply. Despite the fact that interest rates have not moved for months, Egg has recently raised its standard rate from an eye-catching 10% to 12.9%. From 1 January this will rise again to an even less competitive 13.9%.

New applicants with no balances from previous credit cards only get the 0% offer until 1 November 2002.