Unfair Store cards forced to print warning
A long investigation into store cards by the Competition Commission has resulted in new warnings on store card statements. The high interest found with store cards have left many unsuspecting consumers who forgot to read the fine print with serious debt problems.
Cards that charge over 25% interest will now be required to print on their monthly statements that cheaper credit may be available elsewhere. In addition they must now offer direct debit payments and give more and better information on statements in general as so consumers can avoid potential debt.
The investigation found that excess prices paid for credit and insurance on store cards has been at least £55 million a year. It also found that Annual Percentage Rates (APRs) on average were 10 to 20 per cent too high. The Commission first raised concern about this in 2005.
CC Deputy Chairman Christopher Clarke, who chaired the inquiry said, “Retailers and store card credit providers are, we have found, effectively insulated from competitive pressures. The consequence is that store cardholders who take up credit and associated insurance pay too much.”
Michelle Slade, Personal Finance Analyst at moneyfacts.com said that the group had found only 11 cards under the 25% APR threshold, while the majority charge between 25% and 29.9% APR.
“Why is a 25% interest rate considered acceptable?” Ms. Slade said, “That’s over four times the current base rate. How can that be considered as fair?”
Savings News posted on 15/10/2007 11:42:06
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