MSE News: Store card inducements to be banned

This is the discussion thread for the following MSE News Story:

"Shops will no longer be able to offer instant inducements to customers to take out expensive store cards, under a voluntary code agreed between banks and the Government ..."
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Comments

  • think there's a typo in this news story:

    A 28.9% rate costs £289 a year, assuming a constant £1,000 balance. A 20% rate costs £20 using the same example.

    Should be £200.
  • From the article-

    "For example, New Look charges 28.9% annual interest on its store card. This compares to a typical rate on a standard Barclaycard credit card of under 20%.

    A 28.9% rate costs £289 a year, assuming a constant £1,000 balance. A 20% rate costs £20 using the same example. "

    What's the maths behind that?!
  • As above - I thought it was just me !
  • newDude
    newDude Posts: 150 Forumite
    Yeah, spotted that immediately..... £200!!!
  • KxMx
    KxMx Posts: 10,600 Forumite
    First Post Name Dropper First Anniversary Photogenic
    I have 2 store cards, both for occasional use. The interest rates couldn't be clearer and statements always say "will cost you more if you don't pay in full", etc (I always take care not to spend more than I cay pay back in full come the next bill). As far as I am concerned, both the retailers I have cards with do everything openly and honestly, one is even "powered" by Santander!
  • larkim
    larkim Posts: 253 Forumite
    Name Dropper First Anniversary Combo Breaker First Post
    This is a slap in the face for savvy consumers. Why take away the opportunity to take out our three yearly debenhams card (with 10% off all purchases), when I know full well that I have to pay it off in full to get the benefit of the discount on offer.

    I'm not normally the one to wave the "nanny state" flag around, but please give us some credit (sic!) for having enough sense to know how to manage our own affairs!!

    Matt
  • Premier_2
    Premier_2 Posts: 15,141 Forumite
    Combo Breaker First Post
    "Sadly, the lack of financial education in schools means some sign-up for these cards thinking it's free money, and they won't need to repay. Cutting the discount won't help them."

    Sadly, there will always be some that are beyond help.

    You don't need "financial education" to understand that if you borrow money, you are expected to pay it back. That surely is common sense. There may be a case over the lack of understanding of the amount of interest added to the capital, but not the repayment of the capital itself.
    "Now to trolling as a concept. .... Personally, I've always found it a little sad that people choose to spend such a large proportion of their lives in this way but they do, and we have to deal with it." - MSE Forum Manager 6th July 2010
  • Eco_Miser
    Eco_Miser Posts: 4,708 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
    Premier wrote: »
    You don't need "financial education" to understand that if you borrow money, you are expected to pay it back.
    However it may not be obvious to some that they are borrowing money. They don't see any money being borrowed, they just sign a form and get goods on a special offer. If you get goods on other special offers, such as BOGOF, you don't have to pay for the second one later.

    Yes, that is naïve, but it's what lack of appropriate education produces.
    Eco Miser
    Saving money for well over half a century
  • Stuart_W
    Stuart_W Posts: 1,728 Forumite
    Name Dropper First Post First Anniversary
    edited 21 November 2011 at 10:42PM
    Will this apply online, too?

    Littlewoods / Very et al offer 10% or bigger discounts to any customer placing their first order and applying for a credit account at the same time. The same new-customer order paid up-front does not get the discount.

    This daft new rule seems to close a loophole for the savvy, and does naff all to help those who can't manage debt.

    If the banks who provide the cards agree that a discount on the first order can't be offered, is there anything to stop the retailer offering, for example, a free gift voucher, to all new store card holders? If that would be possible, the whole thing really is utterly pointless.
  • Yep nanny state alive and well.

    Despite all the supposed cut backs, it's depressing to think we still pay our taxes so that a bunch of civil servants can sit around dreaming up this stuff.
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