Store card market set to change
Store card providers will now have to print warnings on statements if they charge customers high interest rates.
Any providers whose rates are 25 per cent APR or more will have to print the warnings and will also have to include a summary box outlining rates interest payments, charges and the dangers of only repaying minimum monthly amounts.
The new legislation follows an enquiry by the Competition Commission last year into how much store card providers charge for their products.
David Kuo, head of personal finance at Fool.co.uk, welcomed the move, adding that major stores have been “milking unacceptably high interest rates for too long”.
He added that “more can still be done to ensure that the horse is put before the cart and not, as it stands, the other way around”.
“Consumers do need to be warned of what they are signing up for at the time of applying for a store card – it’s too late after they have incurred debts that they can’t afford,” he continued.
Mr Kuo continued that store cards could be rewarding if they were used sensibly.
Consumers unable to keep up with their credit commitments may wish to take out a debt consolidation loan.
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