MSE News: Store card inducements to be banned

thelawnet

larkim wrote: »

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

I took out a Debenhams card a few years ago. While we were in the store, my wife, who is less financially astute than I, was stopped by a salesman who told her her card could have insurance on everything we bought. Brilliant, she thought, so she signed up.

The only problem, they were going to charge us about 3% extra on EVERYTHING.

When I found out I cut the card up into tiny pieces and swore never to take out one of their cards again.

Anyway, moral of the story is that they only offer these 10% discounts to you because some other poor sod is paying usurious rates of interest to finance your discount. It's great if you save £10 off your coffee maker, but they've charged excessive interest to other customers at least double that. Store cards are socially useless and the discounts must come at a price.

brambram

Does that include points on spending on a cc?

chattychappy

thelawnet wrote: »

Store cards are socially useless and the discounts must come at a price.

I don't like other people deciding for me what is "socially useless".

JimmyTheWig

larkim wrote: »

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!!

But that's the problem. As a whole, we don't have enough sense to know how to manage our own affairs.

Why do you think these stores give these offers?
Is it because they are feeling kind?
Is it because they want to reward savvy consumers?
Or is it because for every discount they give to a savvy consumer they earn way more than that in interest from a consumer who has spent more than they otherwise would / ended up paying interest / etc?

Yes, it's a shame that those of us who could benefit from a deal like this won't be able to any more. But when the deal is in place precisely to catch people out at a later date I'm not going to lose any sleep over it.

Gordon_Hose

larkim wrote: »

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

Pandering to the lowest common denominator, as usual.

Premier_2

Eco_Miser wrote: »

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.

As I said, there's no helping some people.

What kind of special offer is there that involves signing a credit agreement and not expecting to have to pay it back in any way?
With a BOGOF you still pay for the first item.

I don't understand how they cannot understand they are borrowing money (assuming they can read). The form they sign says its a credit agreement and how much they are borrowing / amount of credit they are being allowed. It also usually clearly says that it is a credit agreement and that if you do not understand it or do not agree to it, do not sign it.

This isn't about financial education, it only needs the 3Rs ... infact just one of them: Reading.
No amount of financial education is going to help those, I'm afraid

pepperpot22_2

JimmyTheWig wrote: »

But that's the problem. As a whole, we don't have enough sense to know how to manage our own affairs.

Why do you think these stores give these offers?
Is it because they are feeling kind?
Is it because they want to reward savvy consumers?
Or is it because for every discount they give to a savvy consumer they earn way more than that in interest from a consumer who has spent more than they otherwise would / ended up paying interest / etc?

Yes, it's a shame that those of us who could benefit from a deal like this won't be able to any more. But when the deal is in place precisely to catch people out at a later date I'm not going to lose any sleep over it.

So true. I’ve experienced store assistants being very persistent in trying to get customers to take out store cards. They normally persist even after customers have said ‘no’ once already .Obviously they are under instructions to do this from management and very possibly on commission. And that certainly isn’t to help financially savvy customers save 10%...
Personally I’d rather not get a 10% discount if it means someone who isn’t financially savvy is having to pay ridiculous interest to line to pockets of companies running these cards. Particularly as Shamtander are responsible for running most store cards – just look up the Watchdog programme about Santander store cards.

Former_MSE_Guy

Thanks to those who spotted the typo yesterday on the APR example. My fault. While they shouldn't, mistakes sometimes happen when putting up articles at speed. But thanks to the early detection, it wasn't there for long.

Hanky_Panky

JimmyTheWig wrote: »

But that's the problem. As a whole, we don't have enough sense to know how to manage our own affairs.

Really ? As a whole ?

I don't think so - sure it catches out a minority of people but as a whole - no.

As other posters state - nanny state gone mad. Sweeping legislation to protect the few.

JimmyTheWig

Hanky_Panky wrote: »

Really ? As a whole ?

I don't think so - sure it catches out a minority of people but as a whole - no.

As other posters state - nanny state gone mad. Sweeping legislation to protect the few.

The reason I said "as a whole" is because as a whole the benefits to a store for issuing store cards (presumably mainly in interest payments but may also include tempting consumers to spend more than they otherwise would have done, etc) must outweigh the cost to the store of giving away the perks. Otherwise they just wouldn't bother.

As a whole, then, consumers are not savvy enough to beat them at this game. As a whole, the stores win and the consumers lose.
This doesn't mean that every consumer isn't savvy enough. But as a whole we aren't.