We need more help to kick the store card habit

Expensive. Extortionate. Exorbitant. Call them what you like; store cards have long been the bad boys of the credit market.

I have to confess that once, a long, long time ago, I did own one. But that was back in my impoverished student years when I was a lot less financially savvy, and far more susceptible to the lure of a discount on my shopping.

While I'm pleased to be able to say I took the scissors to that store card only weeks after signing up, millions of shoppers continue to use them.

The problem is, at first sight, these cards can seem appealing. They are easy to take out, convenient to use, and promise substantial savings on your initial purchase.

But for those who get lulled into signing, there can be some nasty repercussions, as annual percentage rates (APRs) as high as 30 per cent can, if left unpaid too long, soon wipe out the value of any savings made. The good news is that new rules came into play from last Tuesday, forcing the most expensive store card providers to clean up their act. Those charging more than 25 per cent now have to print warnings on monthly statements that cheaper credit may be available elsewhere.

They will also have to include "honesty boxes", setting out interest payments and penalty charges. The Competition Commission, the body behind these changes, says the aim is to provide clear information to consumers about what they are paying, and to ensure people are making informed choices. This follows an inquiry in March last year, which found APRs on store cards were - shock, horror - "too high".

But while the measures should ensure more transparency, they simply don't go far enough.

First, the commission has put the cut-off figure at 25 per cent - still more than four times base rate (currently 5.25 per cent). Just how can that be considered acceptable?

Second, as the price comparison service uSwitch points out, it seems to be a case of "closing the stable door after the horse has bolted", as consumers are still getting no warning about what they are signing up to at the point of purchase. They only receive this warning when the statements fall through their letterboxes.

Third, these cards are often pushed at the counter by sales assistants who are not trained in financial services, and who often do not fully understand interest payments or the basic terms and conditions of the cards they are selling.

Things really do need to change, but I'm concerned that, to date, there seems to have been little progress.

Just over a year on from the commission's report, the average store card APR has fallen by just 0.3 percentage points - from 24.6 per cent to 24.3 per cent, according to uSwitch.

This is 7.7 percentage points higher than the average purchase rate on a credit card at 16.6 per cent - and several times higher than that of a best-buy personal loan.

Worryingly, figures from the financial analyst Moneyfacts show that only 11 store cards currently offer rates below the recommended 25 per cent threshold, while almost 70 per cent charge rates of between 25 per cent and 29.9 per cent, including Toys R Us, Burton and Topshop.

Moneyfacts says the commission's recommendations "seem to have been ignored by the vast majority of providers".

Further, it points out that not only have rates not fallen, but some providers are still raising them; only last month, John Lewis hiked its rates, from 15.5 per cent to 16.9 per cent.

In all of this, it's important not to lose sight completely of the fact that you can use store cards to your advantage, for example by making a one-off large purchase to get the 10 or 20 per cent discount, and then repaying the balance in full.

That said, I fear that few of us have the discipline - or the funds - to do this, and are at risk of being clobbered by these eye- watering APRs.

While the measures introduced last week were a step in the right direction, the commission has got to take further action to protect consumers from these exorbitant rates.

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