Store card providers told to adopt clarity
(22 December 2005)

Store cards, which often lure customers into their grasp with enticing promises, bargains and discounts, have been told to clean up their act and come with "wealth warnings" to help customers make informed decisions about whether to take them.

The Competition Commission has proposed that such cards should explicitly provide several important pieces of information on their statements, including the APR applicable to outstanding balances and the level of late payment fees.

Importantly, the "wealth warning" – detailing the consequences of only making the minimum payment – would be included, making customers aware of the amount of interest payable.

The assumptions and policies used in charging interest and late payment fees would also be laid out clearly.

Mike Naylor, principal researcher at Which?, welcomed the move but noted that this would have little impact on the information that people receive when they take up a card offer at the outset.

He said: "The solutions the Competition Commission offers are all helpful, but won’t solve the fundamental problem that shoppers will continue to be sold these cards without adequate information about the rates or charges.

"Information about interest rates should be prominently displayed at the point of sale and in marketing materials as well as on statements. Store cards are an unnecessary and extremely expensive way to borrow. Which? would advise people not to use them - there are much cheaper ways to borrow."

If you want to take out a payday loan, you'll be acquainted fully with the charges and protocols involved from the moment you apply – and with cash advances of between £80 and £1,000 available to be repaid on your payday, you're always aware of exactly how much you've borrowed and the timescale over which you'll be paying it back.



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