We look at the changing face of store card discounts

As some of you may already know, the government of the United Kingdom has made some rather dramatic changes to the way store card discounts are offered across the UK recently. With so many people now using stores cards, we take a look at how this might affect you and your shopping bill.

On 22 November 2011, UK consumer minister Ed Davey confirmed that the Government had made serious changes to the way that store cards would be allowed to work. In the past these a store card would offer discounts up front to people who signed up for them, encouraging them to spend money on credit and potentially saddling them with debt at a time when people have less income and disposable money than at any other point in recent years.

Instead, such store cards will no longer be able to partake in this practice. This essentially makes them loyalty cards, which will need to offer discounts in different ways.

How does this affect the consumer?

The obvious effect that this will have is that people will no longer be able to sign up for store cards on the back of receiving an immediate discount on in store purchases. Rather, these cards will now essentially become little more than store loyalty cards.

This isn't necessarily a bad thing for the consumer, however. Instead of offering them potential financial problems down the line, they will now be rewarded for buying items by way of loyalty points or knock on discounts.

Is this good news or bad news for me?

While it might not appear to be great news, it is actually quite positive for the consumer. It means that stores will now need to find a way to incentivise their store cards, rather than offering the carrot of discounted purchases before charging as much as 30% interest on items bought using the card.

While this will do little to help anyone who finds themselves saddled with debt, especially one picked up due to store card discounts, it should go a long way to curbing the over the top credit interest rates offered by several large stores and chains.

The change should see regular shoppers being rewarded in a different way, without potentially putting them in danger of spiralling debt problems.

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