Originally published February 7 2005
Store credit cards a bad deal in England, too; study finds many consumers clueless about high interest rates
by Mike Adams, the Health Ranger, NaturalNews Editor
When it comes to credit cards issued by stores, consumer activists in England sound much like their counterparts in the United States. They warn that interest rates for store cards are sometimes twice that of others. And they point, with some concern, to a recent study that shows 40 percent of store card holders have no idea how much interest they are paying. The British government is looking for ways to lower the rates.
STORE cards are under renewed fire from consumer groups, MPs and watchdogs.
Store cards are among the most expensive ways to borrow, with interest rates approaching 30% - twice the typical credit card rate.
The Office of Fair Trading voiced concern ten months ago about the lack of competitive pressure in the market.
The Competition Commission is now investigating and looking into concerns that card customers are being given a poor deal.
Against this backdrop of criticism, Financial Mail takes a close look at some of the main store cards on offer, examining the cost of borrowing and the benefits available.
The minimum repayment is �2, or 3%, and there is an interest-free period of up to 59 days.
Homebase cardholders who spend more than �100 may pay nothing for three months, while those who spend more than �1,000 have the option of paying nothing for 12 months.
For example, anyone who borrows �1,000 then fails to repay it within the agreed 12-month period will see the debt spiral to �1,259.
The minimum repayment per month is 4% of the outstanding balance, or �4, whichever is greater.
Four times a year, the company sends to cardholders vouchers and personalised discount offers with a face value of �40m.
THE Fraser card has a high interest rate of 29.3%.
'Though I have cards from House of Fraser, Sears, M&S and John Lewis, the only one I use much is John Lewis.
The Finance and Leasing Association, the trade body that represents most of the major store cards, unsurprisingly defends the terms.
It would take 157 months to pay off the debt because the minimum monthly payment is �2, or 3%, compared with House Of Fraser's minimum charge of 4%, or �4.
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