Store cards are a form of credit card enjoyed by over 13 million people in the UK. Customers are often attracted to them because of the discounts they offer on in-store purchases, and though the credit limit on the cards is commonly low, interest rates can sky high – a fact which has earned the cards a bad reputation.
Consumer magazine Which? puts the average APR on store cards at 25.8% - compared with 16.8% for normal credit cards.
In an investigation into store cards in December 2009, the organisation found that store cards were never good for borrowing. Researcher Martyn Saville said: 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.’
The Department for Business, Innovation and Skills is looking into introducing a seven day cooling off period for store cards as well as giving a regulator power to cap interest rates.
But not everyone thinks there’s a problem. Fiona Hoyle, head of consumer finance at The Finance and Leasing Association, said: ’ There is no evidence of consumers being unable to manage their spending on cards. The interest paid on the average balance in one month is on average just £2.80 and credit limits are usually low.'