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Egg To Charge Annual Fee On Credit Card

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http://www.telegraph.co.uk/finance/persona...redit-card.html

Customers may soon have to pay for the privilege of carrying a credit card in their wallet, if other banks follow the lead set by Egg this week.

Egg – which now owned by Citibank – has become one of the first major credit card providers to reintroduce an annual fee. Customers who take out the company's new "cashback" will now pay £12 a year.

The company is hoping that customers will be prepared to pay this fee for the cashback benefits it offer. It will pay 1pc cashback on all purchases – up to a maximum of £200 per year.

Cardholders will also be offered discounts at selected online retailers (such as Virgin Wines and Lastminute.com) and will get both payment protection. This protection means that if you buy an item on your card and find it cheaper elsewhere within a month, Egg will refund the difference. Items bought on the card are also insured against loss or damage for 90-days.

However, critics have pointed out, that with this cashback rate customers would have to spend £1,200 a year on their card – and incur no interest charges – just to break even. Only after they have spent this, and so cleared the fee, will they start earning "cashback".

Peter Harrison, the credit card expert at Moneysupermarket.com said: "Egg is the first major card provider to introduce fees on mainstream products but this is only the tip of the iceberg. We are likely to see more provides follow suit as they try to claw back profitability following the launch of the Consumer Protection White Paper last week."

Egg confirmed that its customers were spending less on credit cards in the recession. More were not opting to pay down debt, rather than increasing credit limits and putting big ticket items on their credit card.

But Bert Pijls, the chief executive of Egg said this fall in profitability had not impact on the decision to introduce an annual fee. "We prefer our customers to use their cards sensibly," he said. "As this will prove more profitable for us in the long run."

Andrew Hagger of Moneynet, a price comparison site added: "At the moment few credit cards are offering decent cashback rates. But with the fee customers have to use this card regularly to get this benefit. Customers need to spend an average of £1670 on the card each month to claim the maximum cashback."

Anyone going to rush out and pay £12 for the privilege of bailing out Citi?

Will more follow?

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Logically it should appeal to customers with relatively high spends and who pay off the balance each month. Perhaps they want to build a higher-volume, lower-margin, lower-risk customer base?

I've got a cash back card, but I wouldn't want to pay for one.

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Interesting that that's news. I thought most of them introduced an annual charge many years ago. I certainly recollect getting rid of my first access card[1] when they introduced an annual charge, and moving to a card from another issuer.

Hopefully at least the Usual Suspects - people like Nationwide and Coop who never had an annual charge - will keep it free.

[1] now usually known as mastercard.

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Interesting that that's news. I thought most of them introduced an annual charge many years ago.

They did, during the last recession strangely enough, but most scrapped the annual fees again a couple of years later.

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I've got a cash back card, but I wouldn't want to pay for one.

I've got a cash-back card, and they pay me to have it; effectively, anyway, as they regularly send us 10% discount vouchers for the supermarket where we buy most of our stuff.

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I've got a cash-back card, and they pay me to have it; effectively, anyway, as they regularly send us 10% discount vouchers for the supermarket where we buy most of our stuff.

Is that a discount for your choice of supermarket stuff, or their choice of promotions? If the former, sounds interesting - please tell more.

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Is that a discount for your choice of supermarket stuff, or their choice of promotions? If the former, sounds interesting - please tell more.

It's typically something like $20 off if you buy $200 of stuff... but it's only good in Canada :).

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Thanks for this, have an Egg CC which is paid off in full every month. Will cancel, though I haven't received notification of this yet.

likewise.

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Thanks for this, have an Egg CC which is paid off in full every month. Will cancel, though I haven't received notification of this yet.
likewise.

"Existing Egg Money cards will not be charged the fee – and will continue to get the 1pc cashback deal. "

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"Existing Egg Money cards will not be charged the fee – and will continue to get the 1pc cashback deal. "

Well spotted.

Existing Egg Money cards will not be charged the fee – and will continue to get the 1pc cashback deal.

Egg also offers a Visa credit card, with no annual fee. No cashback is earned on this card, although Egg offers various balance transfer deals. Standard APR is again 16.9pc.

I'm pleased to read this doesn't effect existing Egg Money cards. The loss of the 4% in-credit interest rate was bad enough; losing cash back / paying an annual fee would make me consider looking elsewhere.

I believe that Egg were the first to scrap annual fees back in 2000/2001 - right before/as the madness started. Now that the madness has ended it doesn't surprise me that they'd be the first to re-introduce. I expect many others will follow in due course as they did last time.

Like many others here I have a cc, use it for (nearly) all purchases, accumulate the cashback, enjoy short-term interest free credit, enjoy protection on certain purchases and pay it off in full each month so I never pay any interest. I have no loyalty nor debt and therefore happy, willing and able to switch to a better offer or provider if I choose.

I suspect the truth is, though, that the golden age of credit cards is now behind us and anyone with multiple credit cards and multiple debts with multiple providers is soon going to get royally shafted as each provider tries to cover the many bankruptcies, defaults, and PPI reclaiming that they have been, and surely will be, facing as the economic environment goes from bad to worse.

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