New rules and regulations have recently been introduced to try and stop the rip-off APRs you might have seen with store cards. However, some store cards are still charging almost 50 per cent more interest on store cards than you'd find with a credit card.
There has been new regulations recently introduced by The Competition Commission to oversee or police the store cards that charge APRs of 25 per cent or more. So now what have all the stores offering store cards done? We're the obvious thing, reduced the APRs on their store cards to just under 25 per cent so they're not above the 25 per cent threshold and therefore do not need to be overseen or managed. They're simply free to continue as normal.
This is probably the easiest way around any new regulations and I wonder why regulations like this, that are so easy to get around, are introduced at all …
Unsurprisingly since these rules cam into force the average store card interest rate is now just under 24.3 per cent today. Some stores have actually increased the APR's charged on store cards.
Some of the worst value store cards in the UK charge a mind boggling 29.9% APR! I still sit here scratching my head as to why people have this from of credit in their handbags or wallets. The problem is that people are sudussed into special 10/20 or 30 per cent discounts if they open a store card today etc … What they do not realize is that the discount is instantly lost because the card charges interest at around 25 or 30 per cent!
The stores are reliant on the fact that customers will just pop in and pay for something they fancy on the store card and forget about paying it off because it's such a small amount. This is where people often fall into problems with a credit card. All these small spends here and there soon add up and before you know it you can quite easily have a few thousand pounds worth of debt to repay.
If you spend regularly with a store card and you still have a balance to pay off the debt will be costing you more than than it needs to. People in this situation should consider moving the debt to a 0 per cent balance transfer credit card, there are plenty to choose from and you will avoid paying any interest for as long as the credit card offers 0 per cent, which sounds like an absolute no -brainer to me!