Latest Debt News
Store credit is ripping off consumers
18/10/2005 16:58:00
Finance available from retailers could be leaving consumers badly out of pocket.
A survey by the Alliance & Leicester (A&L) found that a third of shoppers believe that credit offered at the "point-of-sale" is competitive. Just over one in five (21 per cent) believe that it is the only way they would be able to afford products from stores.
However the A&L discovered that many big stores charge rates of interest in double figures, even when the base rate is as low as 4.5. The company found double glazing firms charging 20 per cent and discovered kitchen retailers asking for 15 per cent.
Andy Bayes of A&L said that consumers should be careful: "By agreeing to take the retailers’ finance deals, consumers could find themselves heavily out of pocket.
"Retailer credit deals can be one of the most expensive ways to borrow money, so they should be treated with caution. I urge consumers to look at all the options when buying large as well as small purchases, and shop around for a better deal than retailer finance provides."
The news comes after the Competition Commission said that store cards are losing consumers £100 million a year due to a lack of competition in the industry.
It found that cards often charged APRs of ten to 20 per cent more than normal.
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