Store card charges cut by Clydesdale

Over recent years there has been a great deal of controversy over the high interest rates and penalty fees that are charged on store cards, with these cards being blamed for a large portion of the UK’s personal debt mountain along with credit cards.

According to a recent report one issuer has now decided to cut the default charges on its store card. This comes after an approach from the Office of Fair Trading, and the default charge reduction is to take place with immediate effect.

Clydesdale Financial Services is a subsidiary of Barclay’s Bank and following the approach from the Office of Fair Trading has agreed to cut its store card default charges to £12 – prior to this the default charges on the store card were £22.50, so the reduction is close to half of the original charge.

The approach from the Office of Fair Trading came after a consumer complained about the amount that was being charged for defaults on the store card.

In 2006 the Office of Fair Trading acted to get the default charges on credit cards reduced to a maximum of £12 each. Prior to this credit card companies had been charging fees that were close to £40 in some cases, although the fees varied from one provider to another.

However, the Office of Fair Trading had concluded that the charges made by most providers were higher than could be deemed fair, and therefore new regulations came into force that resulted in card providers reducing their fees to a maximum of £12.

The statement that was made at that time by the OFT indicated that this applied to other agreements in addition to credit cards, such as store cards. Officials from the OFT have said that no further action is required following Clydesdale’s agreement to reduce the default charges.