"Wealth warnings" for Store Cards?

Store cards should carry "wealth warnings" to inform customers of the high interest rates they will be charged if they fail to pay off the balance immediately, according to the Competition Commission.

The commission says that any card with an interest of more than 25 per cent should have a clearly displayed warning that people will be able to find cheaper borrowing rates elsewhere.

It also suggests that cards should inform shoppers of essential facts such as the amount of interest that will be incurred if they only make the minimum repayment and details about any insurance purchased with the card.
Mike Naylor, principal researcher from Which? magazine, welcomed the move.

"We're glad the Competition Commission hasn't been hoodwinked into believing the problem of store cards, one of the most expensive ways to borrow, has been solved merely by some companies recently cutting interest rates.

"Store cards are an unnecessary and extremely expensive way to borrow," he added.

But the National Consumer Council (NCC) claims the commission could have done more to protect customers, as most rarely switch cards or compare APR rates.

A spokeswoman for the NCC said the proposals would do little for shoppers who placed little importance on APRs when making their credit decisions.