Egg, the internet bank, is to ban some “sensible” customers from spending on their credit cards as well as those it says are risky, The Times has learned.

The lender last week sent out an unexpected warning to 161,000 card users saying that it will end their agreements in 35 days time, because they have a “higher than acceptable risk profile.” The bank is desperate to offload risky borrowers in the wake of the credit crunch, after Citgroup, its parent company, was left exposed to bad debts in the US sub-prime crisis. However Egg is even blocking some borrowers with perfect credit histories from using their cards.

Experts said that the bank, which has 2.3 million card customers, is effectively penalising these borrowers for being good with their money because they are not profitable customers, and said that other banks are likely to follow Egg’s lead.

David Kuo, head of personal finance at Fool.co.uk, the financial website, said: “It is no surprise that they are doing this to good borrowers as well as risky ones. Middle-aged borrowers with good credit histories are in fact most at risk of having their credit cut, because these people are good at managing their money, so the banks do not make any money out of them. We are going to see more and more of this as the credit crunch unfolds. Egg is just one of many.”

In normal market conditions, banks will increase the amount they are willing to lend “good” customers who have excellent credit records and make their repayments on time, but reduce limits to those borrowers that appear to be struggling.

However since the last summer’s credit crunch, the logic of lending has been turned on its head.

The move by egg is being seen as part of a wider trend among banks, who are attempting to move their customers away from risky unsecured lending on credit cards and personal loans and towards secured lending on their homes, which is safer for the banks, according to Fool.co.uk.

Customers aged between 34 and 49 years of age are most likely to have their credit limits cut or their cards cancelled altogether, however borrowers younger than 25 who have very little credit history and no property are more likely to have their limits extended, the website found.

Mr Kuo said: “On the one hand, they are slashing credit limits to older consumers who have become accustomed to credit but on the other hand, they are increasing limits for younger consumers at a time when we need to practice greater financial discipline.”

The move comes amid growing concerns that borrowers are losing their grip on their personal finances. Around 5 million have missed a credit card payment in the last six months, according to Moneyexpert.com.

Egg said that those affected will no longer be able to use their cards to make purchases, but can continue repaying their debt as before. A spokesman for the bank said that customers who took out credit cards before Citgroup bought Egg from Prudential in May 2007 are most likely to be affected, as it said the bad debt problems occurred before the takeover.

An egg spokesman has not said how many sensible borrowers will be affected, but said: “Customers affected had a higher than acceptable risk profile. The decision to end these customer agreements was taken after conducting a one-off, extensive risk review of our book, following the acquisition of Egg by Citi in May 2007.”

Steve Willey, head of credit cards at price comparison site moneysupermarket.com, said: "If Citigroup was simply stopping further credit card spending by riskier Egg customers, then it should be applauded. But the customer feedback we have been receiving suggests many people who pay their balance in full every month have been targeted. If Citigroup is using this Egg crackdown as an excuse to get rid of less profitable customers, then that is very disappointing."