Outrage Over Credit Cards with 222% APR
28/10/2008
Consumers with poor credit histories are being targeted by unscrupulous high street retailers. About 100 retailers including chains such as Woolworths, Comet, Mothercare and B&Q have signed up to a doorstep lending scheme that results in consumers paying an APR of 222%.
Borrowers are offered pre-paid credit cards or vouchers which are used to buy products from the store. The money must then be repaid at a rate that is more than 10 times the average APR of a credit card.
Debt groups and politicians have expressed anger at the high interest cards, saying that such schemes risk pushing poor families deeper into debt when the country was entering a recession.
The Liberal Democrat Treasury spokesman, Vince Cable, said: "It is wicked to be promoting such high-interest cards and loans at Christmas, when people feel under pressure."
Mick McAteer, director of the Financial Inclusion Centre, said: "What we are lurching towards is a two-tier society where mainstream lenders will only loan money to middle-income and low-risk borrowers while low-income families will be forced to pay very high rates."
Arcadia, the owner of Topshop and Burton, withdrew from the scheme when faced with a backlash from politicians and consumer groups.
Borrowers are offered pre-paid credit cards or vouchers which are used to buy products from the store. The money must then be repaid at a rate that is more than 10 times the average APR of a credit card.
Debt groups and politicians have expressed anger at the high interest cards, saying that such schemes risk pushing poor families deeper into debt when the country was entering a recession.
The Liberal Democrat Treasury spokesman, Vince Cable, said: "It is wicked to be promoting such high-interest cards and loans at Christmas, when people feel under pressure."
Mick McAteer, director of the Financial Inclusion Centre, said: "What we are lurching towards is a two-tier society where mainstream lenders will only loan money to middle-income and low-risk borrowers while low-income families will be forced to pay very high rates."
Arcadia, the owner of Topshop and Burton, withdrew from the scheme when faced with a backlash from politicians and consumer groups.
