Ban instant credit store cards ?????

[Amethyst]

Store cards are most often taken out at the point of sale, the cash desk or customer services desk, often with an incentive of a % discount on that days purchases.

Should this be outlawed so that you have a seven day cooling off period before being able to use the card ?

Could stores still offer incentives to sign agreements in the store, despite having a seven day period to cancel ?

Impulse credit !

During their investigation of the store card market in 2006, the Competition Commission (CC) found that many consumers signed up for store cards on impulse at the suggestion of the sales assistant, with few planning to do so in advance. In most cases, the store card was not taken out for the purpose of obtaining credit, but because of the retail incentive offered on the day. The CC’s qualitative survey found that almost all consumers had taken out the store card without considering what the implications might be and many did not consider the information explaining interest rates. As a result, the CC imposed a series of remedies, such as improved provision of information on statements (including an APR warning).

We recognize that many consumers pay off the balance on their store card within the interest-free period. However, those consumers who do not pay off their balances face a higher interest rate than on other, similar products (26% APR average up to nearly as high as 30% on store cards as compared with 18.2% average on credit cards and between 10.7% and 13.1% on unsecured loans.

We believe that consumers benefit from having time to consider whether a particular loan is right for them. This lack of time is a particular issue for store cards, which is why the coalition agreement proposes that the Government introduce a cooling off period for this form of credit. This would prohibit consumers from using a store card for the first seven days after they have signed up for the card.

What would be the impact of a 7-day cooling off period for store cards on (a) consumer behaviour and (b) store card providers?

[Caspar]

Re: Ban instant credit store cards ?????

a) Very positive - stop impulse credit and reduce consumer debt.

b) Reduce their profits, but to be honest I don't care about them. They should not be "encouraging" consumers to get into debt.

[Caspar]

Re: Ban instant credit store cards ?????

Come on you others - get answering. This is a chance for you to have your say! If we don't speak out nothing will change!

[Zazen.Warrior]

Re: Ban instant credit store cards ?????

I don't use credit cards at all. But I do have a tale to tell about this.

Last time I was approached in a shop and offered a store card I asked what the interest rate was; the woman advised me I was the only person she had approached who had ever asked this question !!

[Caspar]

Re: Ban instant credit store cards ?????

I don't use credit cards at all. But I do have a tale to about this.

Last time I was approached in a shop and offered a store card I asked what the interest rate was; the woman advised me I was the only person she had approached who had ever asked this question !!

Interesting - what would your view be on the two questions asked at the end of the original post?

[Sapphire]

Re: Ban instant credit store cards ?????

I think that they should be stopped, or at the very least when they ask the question 'would you like a XXX card' then they should by law have to tell you there and then what the interest rate is BEFORE you sign up.

[WendyB]

Re: Ban instant credit store cards ?????

Yes well that's all very well, but isn't there a point when you have to let people do their own thing, make their own mistakes etc. We can't look after all the people all of the time. I think sometimes we are going to take the "Nanny State" too far and it'll all end up like "Big Brother is Watching YOU" , George Orwell, 1984 and all that. There is only so much that can be done to protect people from themselves......

Lets face it, we all complain about being told what to do, how to live etc etc if we don't wantto be told, and if it's against what we think ought to be done or want to do, but it's ok for Big Brother to tell us what to do, after the fact, when we're up poo creek with no paddle because we didn't exercise our common sense beforehand........

And before you all crucify me, I'm just being Devil's advocate here, although I really do think that people should start to take responsibility for things instead iof expecting to be bailed out before they can make up their own mind.

[pompeyfaith]

Re: Ban instant credit store cards ?????

I went into argos to buy a leather suite 4 yrs ago and went to pay for it and relised i had left my debit card and wallet at home the cashier said with a big smile no worries sir we can put it on an argos card so you can spread the cost i said i have no id she said no problem if you have it delivered as our driver can verify the address so i did this as a stop gap and paid the borrowing off soon as the statement arrived and cut the card up the point im making is that store cards are to easy to get

[WendyB]

Re: Ban instant credit store cards ?????

And are probably quite useful if used correctly. You obviously had, the money, it was jsut a short term thing for you, you piad it off, a useful stopgap, so to speak. The point I'm making is that we should exercise a bit of common sense when deciding whether to have one or not.

[pompeyfaith]

Re: Ban instant credit store cards ?????

wendy i agree in part but lets not forget there are many below ave consumers out there that just do not understand and it is they that need protection

[pompeyfaith]

Re: Ban instant credit store cards ?????

indeed i already had the money in the bank from a low rate loan and as the card was 6mths interest free i decided to use that instead of a 20 mile trip home to get my bank debit card

[WendyB]

Re: Ban instant credit store cards ?????

wendy i agree in part but lets not forget there are many below ave consumers out there that just do not understand and it is they that need protection

Sorry PF, and whilst I agree up to a point, isn't that similar to what the Family Courts say about people with low IQ's having their children taken away? Perhaps not the best comparison but you can see where I'm coming from. Thing is, it's not a one size fits all and never can be....I'm not below average and object to being treated as if I can't think for myself....and then stand or fall by my own decisons. If circumstances change and I end up in the brown stuff, then it's up to me to deal with it, and that's when the laws, acts, statutes need to be in place to fall back on.

I really think that protection can only go so far before it becomes living someones life for them and we all end up checking a statute before we dare to blow our own noses. We should be encouraging people to think for themselves and take responsioility for themselves, not relying on someone else to sort it out in advance. Having said that, then of course we must do all we can to make sure that things are legal and fair in the first place.

[Sapphire]

Re: Ban instant credit store cards ?????

Well I still think that they should tell people the interest rate before they sign anything, that way they can make an informed decision. As for the rest of it, I totally agree with you Wends.

[Amethyst]

Re: Ban instant credit store cards ?????

I am somewhat on the fence on this one.

How easy it is to accept your 15% discount on the current purchase, sign up to a card, take it home with the intention just to cut it up and pay it off straight away, then think actually thats handy and I'm skint and really need some new shoes/coat and that top is lovely lol so won't hurt, and before you know it £300 on a 30%+ card which you have to pay minimum payments on.

But that is down to individuals, willpower and education

I've never had a store card in my life, I always say no, however enticing the discount is because I know I wouldnt trust myself to cut it up. But then I always say no to PPI and extended warranties as well.

Seven days cooling off period is a good idea - but of course it loses the immediate benefit of the store discount on signing up, and will reduce the take up on the cards massively.

I dont think they should be banned as they do increase customer brand loyalty etc and I guess can be useful to the customers spreading debt about ?

[Sapphire]

Re: Ban instant credit store cards ?????

I suppose it all depends on how strong willed a person is, personally I am weak willed and easily led, and so is my OH, when we were both earning loads it was easy just to present a card and sign the little form or tap in a pin number, thats how we got into financial difficulties, thankfully we are mostly out of it now (apart from one or two stubborn little buggers).
I agree with the cooling off period but would perhaps suggest 14 days to give people time to do research etc and make up their minds.