Lenders 'should be responsible when offering store cards'
Published On 3 August 2007
While store cards can be an effective financial tool for some, consumers should only opt for them if they can pay off all the debt after just one month, an industry expert has advised.The consumer website Moneyfacts.co.uk suggests that 11 million people in the UK own a store card and that the collective interest on this debt amounts to £55 million a year.
A senior researcher at Which?, Martyn Saville, said that it was up to both consumers and lenders to make responsible assessments about whether the person would be able to pay off the debt on a store card before it was issued.
He explained: "Which? believes that financial institutions should always lend responsibly and properly assess the consumer's ability to pay back the credit extended.
"We would therefore expect companies to refrain from offering consumers store cards with credit limits that are beyond their repayment ability.
"Consumers should be assessed for credit risk in a realistic way that truly reflects their existing borrowing patterns and overall financial status."
Recent figures from Credit Action suggest that the total value of all transactions on charge, credit, debit and store cards was £511 billion in 2006.
In addition, the figures showed that 10 per cent of people said that they have missed a payment on something like a store or credit card.
