Rates go down and Egg comes off the boil

In terms of consumer debt levels, a drop can only be a good thing, as it should mean the cost of borrowing gets cheaper.

But the credit card provider Egg surprised borrowers with its decision (ahead of the Monetary Policy Committee's announcement on interest rates), to increase its annual percentage rate (APR) from 14.9 to 15.9. So borrowing on an Egg card will become more expensive.

As well as this rate increase, Egg announced that from 1 September, it is putting up rates on cash withdrawals from an APR of 17.9 to 20.9.

Egg is also cutting its cashback deal for many customers - so it can concentrate, says spokes-man James Thorpe, on its 0 per cent balance transfer offers. Customers who still want a cashback card, he adds, can apply for an Egg Blue card, offering 0.5 per cent on spending.

Some might question Egg's timing, but the 1-point rate increase on its credit card was not a massive rise, points out Samantha Owens from the financial analyst Moneyfacts. "This is indicative of cards that already have low deals being increased to higher levels," she says. "The rate is still competitive."

But Richard Mason from the price comparison service Moneysupermarket.com comes down much harder on the lender, dubbing the changes a "real kick in the teeth" for customers.

"In its heyday, Egg was at the forefront of product design and stood out from the crowd," he says. "But today, this seems to be no longer the case."

Mr Mason notes that this latest announcement follows Egg's introduction in January of a 2 per cent balance transfer fee for new credit-card customers, and the reduction of its 0 per cent introductory period from nine to six months soon after. He urges Egg customers to look elsewhere for more competitive deals.

For those who pay off their balance in full each month, he recommends either the Amex Platinum or Morgan Stanley card, offering up to 2 per cent cashback.

Those looking for a competitive 0 per cent deal on a credit card could consider the Halifax, offering 0 per cent for 12 months (albeit with a 2 per cent balance transfer fee) and a standard APR of just 12.9 per cent.