The way that retailers can promote their storecards to shoppers is being changed, aimed at preventing people from getting into unmanageable levels of debt.
The cards have long been criticised for the huge interest rates that they charge on balances, with typical rates around the 30% mark and a Competition Commission investigation back in 2006 estimating that store cards were costing UK consumers around £55m a year too much.
Although some card providers have since reduced the APR that they charge - Topshop currently has a 'representative' APR of 19.9% compared to 29.9% when the commission originally published its report - a large number of cards including Argos and Homebase still have a representative rate of 29.9%.
The government has stopped short of introducing a maximum cap on the APR that store cards can charge, and instead have introduced a number of rules aimed at removing the 'impulse' nature of people signing up to accounts. The main charges are:
The government has also announced that it has reached an agreement with Barclays, HSBC, Lloyds, RBS and Santander to introduce a new alerts service for customers who get close to their overdraft limit. Text messages or emails will be sent to help prevent customers going over their limit. As part of the agreement, customers will no longer be charged for going over their limit by a small amount.
If you are struggling with debts – no matter how big or small – and need some help, you can get free, impartial information in our Debt Advice Centre.
You could find that by simply switching a balance to a new card, you could save yourself hundreds of pounds in interest each year.
Richard has a degree in Geography from the University of Glamorgan. His long service with us means that Richard can cover any topic relating to credit or identity fraud.
Richard is Marketing Director at checkmyfile.