Retailers Under Pressure To Reduce Store Card Interest Rates
While many of the more traditional credit card and financial companies have come under pressure from the Authorities of late, changes to store card regulations are actually being actioned now.
From today, any retailer with a store card which has an APR in excess of 25% is required to warn customers that they may receive better rates elsewhere. The warning will be printed on the customer’s statement, ensuring clear visibility of the options available.
The Competition Commission investigated the industry last year and believe that customers were being charged in excess of £55 million a year in “over charges†when compared against more traditional credit cards. While the recent changes have been welcomed, it has resulted in many retailers lowering their rates to just below the 25% threshold (still escessive) - thereby not obliged to alert customers to their rates.
Prior to the introduction of the new rules, it was estimated that up to 66% of all retailed store cards were charging interest rates of between 25% and 29.9%. The problem with store cards is the ease of access, the one day promotions to entice you in, and the ongoing discounts available. Many customers do not seem to appreciate that the excessive interest rates are the retailer’s way of clawing back the cost of their promotions (although if you repay your card in full, every month, you will not be charged any interest).
While the recent changes are most definitely a step in the right direction, it is essential that customers take a more hands on approach to their own finances.
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