Thursday, September 15, 2005
Finally some news worthy of blogging about - my brother is getting married! Rang me yesterday to tell me the news - can't say I was too surprised but still good to hear. Will be an interesting occassion as half the guests will be BBC correspondents so if there is anything big going on next March it could be an empty church as they'll all be elsewhere! I'm assuming my brother is planning to ensure that he will no be sent away 3 days before the big day.
I read in the paper today about the big stores getting into trouble because of overcharging for the use of their store cards. The Competition Commission is unhappy because they charge about 30% compared to normal bank rate of 18%, making about £100m a year in extra profit. At the same time the banks tend to back most of these cards anyway. The Commission harks on about the rate being too high, but in doing so seems to have completely missed the point. The reason for such a high rate is that the stores don't really care too much who applies for a card and therefore the risk is much higher - hence the higher interest charge.
The focus should have been on why it is so easy in the first place to get a store card. It is a classic example of consumerism out of control - stores are perfectly happy for you to rack up £5k of debt with the risk of not being able to pay - yet if you get caught for shop-lifting they will prosecute. Not saying I condone shop lifting, more a case of the stores condoning people obtaining goods that cannot be paid for. Controls for obtaining cards should be made much tighter - in the same way you (used to) can only get a mortgage 3 times annual salary there needs to be much tighter credit control. Store cards in theory should not even be required - they are more expensive than a credit card - and if you can't afford to purchase via VISA etc then you should not be allowed to use a store card instead. I've seen too many people struggle in their lives because of debt - about time someone did something to stop it.
I read in the paper today about the big stores getting into trouble because of overcharging for the use of their store cards. The Competition Commission is unhappy because they charge about 30% compared to normal bank rate of 18%, making about £100m a year in extra profit. At the same time the banks tend to back most of these cards anyway. The Commission harks on about the rate being too high, but in doing so seems to have completely missed the point. The reason for such a high rate is that the stores don't really care too much who applies for a card and therefore the risk is much higher - hence the higher interest charge.
The focus should have been on why it is so easy in the first place to get a store card. It is a classic example of consumerism out of control - stores are perfectly happy for you to rack up £5k of debt with the risk of not being able to pay - yet if you get caught for shop-lifting they will prosecute. Not saying I condone shop lifting, more a case of the stores condoning people obtaining goods that cannot be paid for. Controls for obtaining cards should be made much tighter - in the same way you (used to) can only get a mortgage 3 times annual salary there needs to be much tighter credit control. Store cards in theory should not even be required - they are more expensive than a credit card - and if you can't afford to purchase via VISA etc then you should not be allowed to use a store card instead. I've seen too many people struggle in their lives because of debt - about time someone did something to stop it.
// posted by Dave @ 9:11 PM 
