Are new store card requirements of any benefit?

Recent new requirements that have come in with relation to store cards in the UK don't seem to be having the desired effect, with many consumers still having to pay a fortune in interest charges for the privilege of using the cards. In line with the new requirements store cards that charge over twenty fiver percent APR must make this clear on the statement, along with information such as penalty charges, and the risks of making minimum repayments on the card.

According to recent reports consumers are still being charged hefty interest fees on store cards after being baited into taking them out by offers of deep discounts, free gifts, and other tempting incentives. Although this can be a bonus for those that are able to repay the balance on the store card in full each month it can prove a very costly incentive indeed for those that can only afford to repay a small portion of the balance each month.

One Moneyfacts official stated: 'The Competition Commission recommendations to the store card industry to consider 25% APR as a high rate of interest seems to have been ignored by the vast majority of providers. The Competition Commission must take further action to protect consumers from these exorbitant rates. Don't get lulled into signing for a card unless you are going to make a substantial discount on your initial purchase and repay your balance in full.'

There are a number of downsides to using store cards, the high interest rate being one major downside for those that cannot repay their balance in full each month. Another is the restrictive nature of the cards, as they can only be used in a certain shop or chain.

Tom Smith
3rd June 2007