Store cards hike rates in time for Christmas

by Gill Montia

Story link: Store cards hike rates in time for Christmas

Early Christmas shoppers are being warned not to load up their store cards unless they want a financial headache that could last well into the New Year.

According to Moneyfacts, interest rates on store cards are being increased in time for the festive season.

The financial website has reported that women’s clothing retailers, Karen Millen, Oasis and Principles have increased their rates by up to 4.3% to 28.9% APR.

From May of last year, the Competition Commission has required store card providers charging over 25% APR to include a warning on their monthly statements that cheaper deals are available elsewhere.

As a result, store card providers cut rates but with High Street takings down, the credit crisis deepening and Christmas three months away, rates are on the rise.

Moneyfacts analyst, Michelle Slade, comments that many customers may be tempted to apply for a store card because they are offered a discount on their first purchases.

However, any savings could end up costing shoppers hundreds of pounds in additional interest.

Ms Slade also warns consumers to be wary of cuts in the minimum repayment required to pay back the debt.

Moneyfacts calculates that a customer making a £500 purchase on 28.9% APR deal could take eleven years and nine months to clear their debt, if they pay the minimum monthly amount.