Consumers still being hit with extortionate fees on store cards

Despite new requirements that have come into force for store card operators, consumers using these cards are still being charges a fortune in interest after being persuaded to take out the card with a special discount, offer, or freebie.

Store card statements must carry certain information as from the beginning for this month, including the APR if it is 25% or above, information on penalty fees or charges, and information relating to the dangers of making minimum repayments only.

A clampdown on store cards was ordered by the Competition Commission in 2006, but according to reports there has been little change in the amount that consumers are being charged in interest when using the store card.

Consumers are baited into taking out the card with the use of tempting offers, special discounts, and freebies. However, once they start using the card and make only a partial payment on the balance, they are hit with horrendous interest charges that more than make up for any initial discount of offer that they may have received.

One financial expert from Moneyfacts 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.'

Store cards have become one of the leading problems for many of those in huge levels of debt in the UK, as a few small purchases can end up costing the consumer dearly unless the balance is repaid in full within the interest free period specified on the card.

Tom Smith
9th May 2007

More Information:

• How To Manage Your Store Card
  Many major outlets offer store cards. These provide an easy way for consumers to defer payment for purchases. Store cards are promoted over public address systems in shops and by shop assistants at checkouts. So it's no surprise that there are more than 14 million store cards accounts in the UK.
• Making Credit Card Fees Easier To Understand
  On average, UK credit card issuers make somewhere between £300 and £400 million a year in fees charged off of UK credit card users who have not fully understood how the credit card issuer has arranged the charging of their fees and who do not complain directly to the card issuer for any excessive or incorrect fee charges. In anyone’s language, this is a staggering amount of money!
• How To Avoid Paying Those Pesky Credit And Debit Card Fees
  It seems that UK credit and debit card providers would like to charge us each and every time we use our plastic cards these days. While the charge for each separate individual transaction may not seem like much, add them up over a month or two and suddenly the amount has some value. So, how do we avoid having to pay pesky fees to UK credit and debit card providers?