Fertilising Your Finances (Egg Card)

Member Name: plipplop

Product:	Egg Card
Date:	05/11/06 (528 review reads)
Rating:

Advantages: Cashback, good internet account management, fraud protection

Disadvantages: APR not as competitive as others

Credit cards are aiming to be more and more competitive. It’s a sign of the times, and it’s fantastic news for the consumer. Credit card spending is now recognised as a powerful retail tool, no more so than for online shopping where having a credit card is virtually essential. Egg was one of the first financial institutions to cater solely for online financial management, coupling increased technology awareness with a groovy youthful image.

I’ve had a credit card with Egg for around 4 years now. It never used to be my card of choice, simply because I was always happy with my Barclaycard, but the lure of cash back coupled with the Internet account management facilities eventually lured me to the green card.

Who are they?

The company was launched in 1998 by the Prudential – the UK based financial institution. The company were listed on the stock exchange in June 2000 and they now have several million customers. The Egg company deals in banking, investments, insurance and online shopping, but their most successful product is without a doubt the Egg credit card. www.egg.com won the Yell.com award for Best Finance Site in 2001 (I’m a big fan of easy to remember URLs - and www.egg.com is pretty easy to remember.)

Application Process

Not surprisingly, the application process takes place online with no forms, paperwork, or phone calls. Simply sit down in front of the PC, fill in your details and then wait for a decision. Given that the vast majority of credit applications are managed without human intervention (i.e. a computer decides whether you are worthy or not), this seems like the most logical way to apply to me. Most of the conventional cards now accept applications on line as they recognise the cost savings to be made. My application was processed very promptly and within a few days I had my shiny new green card to go and play with.

Fees

The theory behind offering account management online is that it offers a significantly reduced cost per transaction. For instance, a recent report stated that a banking transaction completed over the counter would cost in excess of £4 whereas online, that cost is reduced to 5p. Needless to say, with a bank that operates exclusively online, you should expect competitive rates. Egg doesn’t really come up to scratch in this area.

Egg charges no annual fee but the standard APR on purchases is currently 16.9% (it was 12.9% when I first took out the card and has therefore increased somewhat over the years). This isn’t the lowest on the market, as there are over 20 other lenders with lower standard rates. There is also an introductory rate of 0.0% on transferred balances or purchases for the six months from account activation but again there are other lenders with better deals. One of the reasons that I suspect the base rate is slightly higher is that the card offers cash back on all purchases of 0.5% annually, the cost of which is probably offset by the slightly higher APR. Furthermore, if you withdraw cash from your card, you will be charged an APR of 22.9% - plus a 1.25% handling fee.

Don’t be completely fooled by the nice, smiley bold type. When it gets down to the small print, Egg is a money lender like any other, and if you fail to play by the rules the fees will start cropping up on your statement. Egg charge £16 for a missed, returned or late payment, £2 for a paper statement and a 2% commission charge when converting foreign transactions into sterling. Egg, therefore, certainly isn’t the most competitive provider.

Making a Payment

Payments must be made on a monthly basis, unless a formal payment holiday is offered. Your minimum payment should be at least 2% of the balance or £5, whichever is greater. Egg will only accept payments made by direct debit, or by using a debit card. There is no means of making a payment at the bank – everything must be completed online. Although you arrange a fixed payment by direct debit (either the minimum payment, complete balance or a fixed amount) you do have complete control over this and can amend how you make your payments from one month to the next. You can also make additional payments by debit card.

Payments made in this way are erratic. The web site quotes three working days for the payment to appear on your account, providing you make the payment by 14:30. I’ve had payments clear as quickly as one day and as slowly as five.

Making the Move to Online Account Management

I suppose the greatest adjustment for new account holders is not receiving paper copies of anything. When you first get accepted for an account you will receive a paper copy of your terms and conditions, but thereafter you can pretty much guarantee that the only mail you get from Egg will be for marketing purposes. This takes a while to get used to but in these days of identity fraud, it really is the better option. You can view recent transactions online, and keep abreast of your spending far more easily this way and if any fraudulent transactions do appear on your account, you can respond far more quickly.

Other facilities are also handy, including the capability to view and/or change your PIN.

The Account Management Interface

The pages are relatively uninspiring – I find the pages for Barclays online or Cahoot rather more professional and functional to use. The layout and menus are surprisingly simple – something that many users will welcome and certainly a priority of Egg’s management team. Your Egg credit card is affiliated with any other Egg products that you have, so that your personal home page has simple + and – menus to reflect savings and borrowing. Transactions are controlled via a menu of links to the left hand side of the screen – most transactions are very simple to complete, and where appropriate (making a payment, transferring a balance etc) you will receive an email to confirm what you have done. Site reliability is very good. I have never experienced a period of down time.


Security and Fraud Prevention

Most financial web sites these days offer a considerable level of security, and Egg is no different in this respect. At login, you are now required to input first name, surname, post code, date of birth, mother’s maiden name and password. Getting it right first time isn’t always easy and I find that using scroll down menus for the date of birth is far more time consuming than simply entering the details in manually. That aside, Egg advise us that scroll downs are much harder to trace than keyboard clicks (yikes – I’m wearing gloves from now on) so I guess we should be reassured. If you don’t access the site whilst logged on, within 15 minutes, you will be automatically logged off. Similarly, when you telephone Egg you will be asked for a selection of security information. You can also set cookies so that only your mother’s maiden name and your password is requested each time you log on.

Using my Egg card has proven troublesome. Retailers that are associated with recent fraud; purchases above a certain value; and a certain number of purchases in one day; all these things can result in your card being blocked. I was advised that you couldn’t have more than 8 transactions in a 24 hour period and that furthermore there is no real time authorisation system, meaning that transactions are simply declined and that’s that. I’m all for fraud prevention but I’ve lost count of the hours spent on the phone to Egg trying to get a block lifted and to make matters worse, the number isn’t even free to call.

Benefits

Obviously, convenience is a benefit of managing a credit card account like this. You can relax in the knowledge that your payments will be made automatically each month, and that you have the flexibility to administer these at any time of night or day. Cash back on purchases is attractive to many customers and if you purchase goods through the Egg shopping portal you earn a greater level of cash back. They also offer protection against online fraud, and additional product insurance in the event that something you buy gets lost, stolen or damaged before you get it home. As a new account holder I was impressed with the credit limit that I was given - £10,000 is unusually high upon application.

Customer Service

I have no complaints here. My emails are answered promptly, and telephone advisors are usually knowledgeable and helpful. Waiting times for calls to be answered in the call centres are generally quite good, although I seldom have need to use the phone number as I find that I can conduct business completely via email.

My Verdict

Egg is good, but not the best. The APR is not competitive enough if you carry a balance and I think that the cash back should be discontinued in favour of a lower APR, or possibly offered as an option. Without carrying a balance, the card works for me because I earn cash back for nothing. The web site is pretty good but I always get the feeling that I could be using something more advantageous to me.

Summary: Perfect credit card for those who don't carry a balance