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  • FIRST POST
    • MSE Guy
    • By MSE Guy 21st Nov 11, 1:14 PM
    • 1,628Posts
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    MSE Guy
    MSE News: Store card inducements to be banned
    • #1
    • 21st Nov 11, 1:14 PM
    MSE News: Store card inducements to be banned 21st Nov 11 at 1:14 PM
    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 ..."

Page 1
  • pumpkin_soup
    • #2
    • 21st Nov 11, 1:19 PM
    • #2
    • 21st Nov 11, 1:19 PM
    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.
    • zx81
    • By zx81 21st Nov 11, 1:19 PM
    • 22,092 Posts
    • 24,102 Thanks
    zx81
    • #3
    • 21st Nov 11, 1:19 PM
    • #3
    • 21st Nov 11, 1:19 PM
    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?!
    • fortyniner
    • By fortyniner 21st Nov 11, 1:39 PM
    • 34 Posts
    • 4 Thanks
    fortyniner
    • #4
    • 21st Nov 11, 1:39 PM
    mental arithmatic
    • #4
    • 21st Nov 11, 1:39 PM
    As above - I thought it was just me !
  • newDude
    • #5
    • 21st Nov 11, 1:56 PM
    • #5
    • 21st Nov 11, 1:56 PM
    Yeah, spotted that immediately..... 200!!!
    • KxMx
    • By KxMx 21st Nov 11, 3:26 PM
    • 7,581 Posts
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    KxMx
    • #6
    • 21st Nov 11, 3:26 PM
    • #6
    • 21st Nov 11, 3:26 PM
    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
    • By larkim 21st Nov 11, 3:54 PM
    • 230 Posts
    • 153 Thanks
    larkim
    • #7
    • 21st Nov 11, 3:54 PM
    • #7
    • 21st Nov 11, 3:54 PM
    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
    • #8
    • 21st Nov 11, 5:03 PM
    • #8
    • 21st Nov 11, 5:03 PM
    "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
    • By Eco Miser 21st Nov 11, 8:19 PM
    • 3,444 Posts
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    Eco Miser
    • #9
    • 21st Nov 11, 8:19 PM
    • #9
    • 21st Nov 11, 8:19 PM
    You don't need "financial education" to understand that if you borrow money, you are expected to pay it back.
    Originally posted by Premier
    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 nave, but it's what lack of appropriate education produces.
    Eco Miser
    Saving money for well over half a century
    • Stuart_W
    • By Stuart_W 21st Nov 11, 8:38 PM
    • 1,426 Posts
    • 689 Thanks
    Stuart_W
    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.
    Last edited by Stuart_W; 21-11-2011 at 8:42 PM.
    • chattychappy
    • By chattychappy 21st Nov 11, 8:44 PM
    • 7,084 Posts
    • 3,919 Thanks
    chattychappy
    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.
    • thelawnet
    • By thelawnet 22nd Nov 11, 1:55 AM
    • 2,458 Posts
    • 1,690 Thanks
    thelawnet
    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
    Originally posted by larkim
    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
    • By chattychappy 22nd Nov 11, 7:36 AM
    • 7,084 Posts
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    chattychappy
    Store cards are socially useless and the discounts must come at a price.
    Originally posted by thelawnet
    I don't like other people deciding for me what is "socially useless".
    • JimmyTheWig
    • By JimmyTheWig 22nd Nov 11, 8:36 AM
    • 11,851 Posts
    • 11,393 Thanks
    JimmyTheWig
    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!!
    Originally posted by larkim
    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
    • By Gordon Hose 22nd Nov 11, 8:52 AM
    • 6,057 Posts
    • 4,113 Thanks
    Gordon Hose
    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
    Originally posted by larkim
    Pandering to the lowest common denominator, as usual.
  • Premier
    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 nave, but it's what lack of appropriate education produces.
    Originally posted by Eco Miser
    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
    "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
    • pepperpot22
    • By pepperpot22 22nd Nov 11, 9:55 AM
    • 45 Posts
    • 26 Thanks
    pepperpot22
    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.
    Originally posted by JimmyTheWig
    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.
    Last edited by pepperpot22; 22-11-2011 at 9:58 AM.
    • MSE Guy
    • By MSE Guy 22nd Nov 11, 10:05 AM
    • 1,628 Posts
    • 1,255 Thanks
    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
    But that's the problem. As a whole, we don't have enough sense to know how to manage our own affairs.
    Originally posted by JimmyTheWig
    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.
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