Store cards cost Brits £350 million
04 May 2004
British consumers are spending an extra £350 million a year by using high interest rate store cards, new research claims.
A survey conducted by Sainsbury's Bank found that UK shoppers could collectively save £350 million a year by transferring outstanding debt from store cards to more competitive credit cards.
An estimated 12.2 million people in Britain have store cards, but of just 53 per cent clear their balance every month, the Sainsbury's survey revealed.
The research also found that an estimated 565,000 people have balances of more than £1,000 left on their cards at the end of each month, while 92,000 have balances above £5,000.
The bank suggested that one of the reasons people failed to clear their cards in full was that 60 per cent were not aware what interest rate they were being charged on their debt. The survey found that 22 per cent of store card holders did not realise they could transfer their store card debt.
Store cards often charge around ten per cent more than credit cards and the bank urged customers who do not pay off their store cards in full each month to transfer their balances to a credit card with an introductory rate of 0 per cent.
The Office of Fair Trading recently asked the Competition Commission to carry out an investigation into the way store cards operate in Britain and claimed there was a distinct lack of transparency between card companies and consumers.