Brits overpaying for store cards

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They are easy to take out, come with discounts on your first shopping but they could be charging you 20 per cent too much interest.

By only paying off minimum amounts this could quickly add up to hundreds of pounds wasted.

The Competition Commission (CC) yesterday published its report into store cards and found that on average they had annual percentage rates (APR) 10 to 20 per cent too high.

In total there are 11 million store cardholders in the UK owing over £2 billion, so these cards are big business for the shops.

However, the high interest rates could be costing UK consumers £55 million or more a year.

CC deputy chairman Christopher Clarke, 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."

"Even though lower APRs have recently been, or are being, introduced for some store card programmes, even by the end of 2006 more than 90 per cent of store card accounts are projected to continue to pay APRs of more than 25 per cent."

Consumer watchdog Which? also pointed out that shop assistants offering the cards often do not know enough about what they are offering.

Which? principle economist Alena Kozakova said: "It is the sales process that needs most attention so consumers know what theyre getting in to.

"Many of the shop sales staff who sell store cards have little understanding of the financial details and yet can be incentivised for each sale. This leaves consumers in danger of being badly advised and ending up with a very expensive high interest product that they dont need."

She added: "Store cards are an unnecessary and extremely expensive way to borrow and we have always advised people not to use them."


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