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Mixed feelings over store cards

March 2, 2011 by Reno  
Filed under News, News-Credit-Cards

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When it comes to store cards there is a great deal of bad press, and these cards have earned a very bad reputation over the years, mainly because of the high rates of interest that they charge. Some store cards charge up to 30 percent APR, and this results in many people who make only the minimum repayment on their debt paying a fortune in interest and spending lengthy periods of time trying to clear their debt.

Many people are swayed into taking out a store card because retailers offer them incentives such as on the spot discounts for applying for and being accepted for a store card when they are shopping. This can tempt many people into taking out a card and getting into debt especially when the cards are promoted at times such as Christmas when people are looking for ways to fund their purchases.

However, some industry officials have said that although these cards do receive bad press and are slated for a number of reasons they can actually prove very useful for consumers. They can provide a convenient means of shopping, and like credit cards balanced can be paid off within interest free periods so that no interest is charged on the debt.

One consumer campaign group official said: ‘With APRs of around 30%, store cards are never good value for borrowing. Our investigation into the market found it was too easy to get hold of credit and that too many retailers were offering cards either without telling the customer that they’d be credit checked, or, worse still, without credit checking them at all. That’s not to mention the lack of privacy in reading out your personal details in a busy high street store.’

However, the Finance Leasing Association said: ‘There is no evidence of consumers being unable to manage their spending on cards. Customers are already able to change their mind about taking out a credit card. New EU regulation bought in February this year provides customers with an opportunity to change their mind within 14 days of taking out the card.’

Tags: high street store, New, consumer campaign group official, campaign group, market, business, free periods

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