More rejected credit cards

In the wake of the credit crunch, banks have rejected an estimated 3.24m new credit card applications over the last 6 months, or 18,000 per day.

It is thought that Barclaycard, the biggest credit card company, is rejecting up to half of all those applying for a credit card it strives to protect its exposure to bad payers. Whilst other credit card providers are reducing spending limits and increasing interest rates and charges.

The report, by MoneyExpert.com, found that 7% of adults have experienced a credit card rejection in the last 6 months. Being rejected by one company can also make it harder to ger money from other companies as this can be recorded on your credit file.

Egg Accused

Egg has been accused by customers of freezing cards of people who do not pose a credit risk. It reported last week that it had told 160,000 that their spending power was to be curbed as they were high debt risk customers, but many have reported on internet forums and post boards that they have in fact always paid off balances in full.

Egg reject Dave from, Hertfordshire, wrote on the BBC website: 'My credit record is excellent and I actually took out an Egg loan three months ago.

'My Egg credit card has not been used for over six months and had £0 owing. Some customers are being ditched because in my view they are not making Egg any money.'

At the same time, customers have posted that their credit limits have been increased, even though they were in debt.

Egg rejected the claimns. A spokesman said 'We are not using this as an excuse to get rid of unprofitable customers.'

Credit Cards Harder To Come By

Egg started sending out letters to its customers last Thursday to tell them their cards where to be locked in 35 days, although they are expected to continue making repayments. The move is reported to be a response to the company being bought last year, rather than the global credit crisis.

HSBC has reported that its acceptance of credit card applications has reduced from around 2 in 3 to just under 1 in 2 applications, whilst Barclaycard has said that it is blocking some customers from withdrawing cash on their credit cards, as this can be a sign of financial distress.

A poll on the This Is Money website reported that about 20% of respondents have suffered a cut in their credit limit since August. Whilst the website MoneyExpert.com reported from its survey that the number of people missing at least one repayment has soared. In June around 4.1m card holders had missed a payment whereas by December that figure had increased by 1m.

Egg To Block Credit Cards

Egg is to block 160,000 credit card users from using their credit cards. These people will be receiving letters warning them that their cards are to stop working in 35 days.

It is believed to be the first time a credit card company has implemented such a drastic move to curb over spending. But other companies could follow suit over time. If many do copy and a lot of adults are affected, the ramifications on the high street could be hard hitting as people who rely on credit are unable to shop for luxuries.

Egg is believed to be targeting 7% of it's 2 million customers, because they pose a 'higher than acceptable risk profile'. This could include being over the credit limit or failing to pay the minimum balance.