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Store Cards

In the UK millions of people are forced to pay disproportionately high penalty charges on late payments of store cards.

Extortionate credit & penalty charges
These companies that promote store cards seem to offer a great deal for consumers in way of incentives to entice consumer in to having one. In reality these store cards can lead to consumers having to pay penalty charges due to a late payment or an administration fee for cheques and debit cards. The interest rates on some of these store cards are also extortionate. This results in consumers paying even more for the goods they have obtained. Therefore we have decided to discover which of the main high street stores are the worse offenders for using penalty charges. Consequently the worst offender will be asked to explain why they feel that they are allowed to use these penalty charges when in fact they are contrary to the Unfair Terms in Consumer Regulations 1999.

The market is worth about £5bn a year, and is largely in the hands of four card providers. They are GE Consumer Finance, Ikano Financial Services, Creation Financial Services and HFC Bank, part of HSBC Group

The commission said that over the past five years the excess charges had generated £270 million in unfair profits after tax had been paid. It demanded that card companies introduce sweeping changes including putting a "health warning" on statements that "cheaper credit may be available elsewhere".

Even though the cards are "branded" with the name of a store, Mr. McFall said, his committee found that retailers do not seem concerned whether the price of their card - its interest rate - represented a good deal.
"If you buy a suit from one of these stores, then you would expect the retailer to ensure the suit was well made and reasonably priced - and that they would strive to provide value to the customer. But these principles do not seem to apply to their store cards," he said. "These cards are the next worst thing to a loan shark if you judge them on interest rates that are charged"
Spokesman for the National Consumer Council

The Store Card companies where asked to explain their charges. However most never replied, or just declined to answer.

The Mystery Shopping Exercise- Commissioned by the OFT

A total of 763 mystery shopping visits were made.
In 84 per cent of cases, there was no area set aside for customers to consider and sign agreements.
When asked specifically about the APR the assistant could not provide the answer in 30 per cent of cases.
When asked specifically about penalty charges, in only one in five cases was this forthcoming.

STORE CARD CHARGES - Worst offenders league table:


Selfridges & Warehouse 30.9% Late Payment Fee: £25
Over Limit Fee: £25
Toys R Us 15.9% Late Payment Fee: £25
Over Limit Fee: £25
Monsoon & Arcadia Group
(Burtons, Evans, Top Shop & Dorothy Perkins)
29.9% Late Payment Fee: £15
Over Limit Fee: £15
Comet 29.9%  
Currys 25.9%  
Debenhams 28% Late Payment Fee: £15
Over Limit Fee: £15
House of Fraser 29.3% Late Payment Fee: £15
Over Limit Fee: £15
French Connection 28.6%  
New Look 25.9%  


John Lewis Account 13.0% £5 or 5% £38.21 £238.21
M&S Money Store 18.9% £5 or 3% £94.21 £291.21
B&Q You Can Do It 26.8% £4 or 4% £139.80 £339.80
House of Fraser 29.3% £4 or 4% £163.42 £363.42
Debenhams 29.9% £4 or 4% £169.61 £369.61
Top Shop Privilege 29.9% £4 or 4% £169.61 £369.61
Argos Store 25.9% £2 or 3% £284.79 £484.79
Homebase 25.9% £2 or 3% £284.79 £484.74

Since the introduction of the Consumer Credit Act 1974, the UK has had no statutory ceiling for interest rates. There was a 48 per cent per annum limit but, unfortunately, the Act abolished it. Currently, the only protection under the Act for consumers who have got into difficulty is that lenders cannot charge "extortionate" interest rates. That is of little assistance to people who cannot afford to go to court and when there is no legal definition of "extortionate". High quality fashion louboutin pump for sale online.

The Consumer Credit Act 1974 (c39)
138 When bargains are extortionate
(1) a credit bargain is extortionate if it –
(a) requires the debtor or relative of his to make payments (whether unconditionally, or on certain contiquencies) which are grossly exorbinate, or
(b) otherwise grossly contravenes ordinary principles of fair dealing.

(2) In determining whether a credit bargain is extortionate, regard shall be had to such evidence as is adduced concerning-
(a) interest rates prevailing at the time it was made,
(b) the factors mentioned in subsections (3) to (5), and.
(c) any other relevant considerations

Under the Consumer Credit Act 1974 a consumer could argue that the APR rate is extortionate. and, thus contravening ordinary principles of fair dealing.

For Consumer who suffer from penalty charges then they can claim these charges back (see the Law Page)

"There are many problems with Store cards. They can result in many consumers plunging you into debt if you do not treat them with extreme care. 5 million Britons took these cards on over the Christmas period and with high interest rates many consumers will find themselves facing extortionate charges.

Most buy into these store cards without the necessary knowledge that is needed when it comes to dealing with store cards and the spate of hidden charges that lurk in the murky depths of the small print."

The OFT knew that these charges are highly extortionate years ago, as can be seen in their statement above. They have, however, failed the consumer that they were designed to protect. Therefore, we hope this page has helped you. We hope that you claim back the penalty charges or even apply to the court to have your APR rate lowered.