Store cards forced to get upfront with customers

02 May 2007
Store card providers will have to alert users to the loss they could be making if the provider is charging them an APR of 25 per cent or more, the Competition Commission has ruled.

Each card statement will have to carry an admission that the user could be better off elsewhere, the watchdog announced.

Statements will also have to carry a summary box in which customers receive clear details of interest payments and possible penalty charges.

The new rules, which came into effect on May 1st, are designed to demystify store cards for customers who often fail to realise they are paying more than they need be.

At least 19 UK store card providers offer cards with APRs above 25 per cent, according to Nick White, director of financial services at uSwitch.com.

But he believes more must be done to ensure customers know what they are signing up to before they receive their first statement.

Regulation over providers' practices at the point of sale is too weak, Mr White claimed, with staff poorly trained and unable to either understand or explain interest rates and penalty fees.

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