Credit Cards High Street retailers shamed into ending rip-off charges

The Competition Commission has at last customers up to £100 million each year through excessive interest rates and other charges

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The main culprits were found to be store cards which were charging up to 30.9% interest even though the Bank of Englands base rate stands at just 4.5%. The worst culprits were TJ Hughes and the Faith Card who you can see heading the Table of Shame shown later in this article. (Cheap mortgage)

In addition, the commission came down on high penalty charges for missed or late payments and Payment Protection Insurance. Penalty charges currently average £15 per event - but the Commission argue that these charges are also excessive.

As for Payment Protection Insurance, the Commission has decreed that whilst this insurance can be a good idea, credit card operators have abused it. Therefore, Payment Protection Insurance must no longer be sold as a package with a credit card; it must always be purchased as a separate transaction. Thatll be good news for the Internet where all the cheapest Payment Protection Insurance deals can be found with premium savings up to 60% in comparison with credit card and loan packed arrangements.

The new rules from the Competition Commission mean:

• If a credit card charges more than 25% interest, it must carry a ( cheap loans ) warning that there are cheaper ways to borrow. These warnings must be displayed on each monthly statement. (life insurance)

• The interest rate and penalty charges must me clearly displayed on the front of every monthly statement.

• The monthly statement must also warn of the consequences in terms of higher interest charges, of only paying the monthly minimum repayment.

• Cards must offer the option for customers to clear ( mortgages ) their monthly balance each month by an automatic direct debit. This avoids any possibility of interest charges and late payment penalties. (mortgage deals)

• Credit Card operators can no longer sell Payment Protection Insurance packaged ( personal loans ) with the credit card. They must be both separate and optional transactions that enable purchasers to see the true cost.

These new rules seem certain to shame retailers into cutting their charges - thats not to say that 25% pa interest is a snip! Main line credit cards are currently charging circa 14% to 18% and we think thats too high! Indeed, between 80% and 90% of store cards are charging more than 25% and are held by some 11.5 million customers. But some retailers have already realised that ( motor insurance ) their sky high charges couldnt be sustained and have taken steps to trim back. Harvey Nichols has already trimmed their interest from 28.5% to 21.9%, River Island has gone down from 29.9% to17.9% and Monsoon from 29.9% to 18.9%.

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