New wealth warning tagged to store cards
Store credit cards can be a very convenient way for regular shoppers to purchase goods from a specific store or chain, however they can also be extremely expensive. In a surprise move, new legislation will force large store chains that issue cards, to include a wealth warning advising potential borrowers that they could source credit at a far cheaper rate, elsewhere.
The change, which is due to commence in the next few months, will be displayed to customers on their monthly statements.
In a similar fashion to wealth warning’s associated to secured loans, the statement will be displayed in a prominent fashion with the intention of reminding or even informing customers that they could be paying over the odds.
A large percentage of store loyalty cards carry repayment rates of around 25%, considerably higher than other forms of credit. Finance watchdogs have urged the store card industry to reconsider their interest offerings as being to high, but little to no action has been taken, up until now. It is believed that UK consumers, who actively use such cards, are over spending by a phenomenal £50 million pounds each year.
It is suggested that consumers who are used to buying goods from large stores using loyalty cards, should seriously consider low interest loans or other cheaper credit offerings as an alternative.
