A report released this week has provided evidence that consumers are paying up to £100 million extra when it comes to store credit cards. The Competition Commission conducted the report that officially declares store cards as a rip-off.

The Watchdog produced a report which included conclusions that there were features in the store card business that insulated retailers and credit providers from competitive pressures, and plans to enforce greater transparency to aid and educate consumers.

Towards the end of 2004, there were almost 14 million active store card accounts, with outstanding balances of around £2.5 billion. Nearly a third of adults own a store card, and with the majority of providers charging around 30% APR, there is little wonder that 57% of store card users fail to pay off their balance each month.

On average, the Commission found that interest rates on store cards are 10-20% higher than on the average credit card. The investigation has been running for some time and has prompted some major card providers to lower their APRs, but the CC confirmed that they will continue to propose a series of remedies aimed at giving consumers greater protection.

The Competition Commission deputy chairman Christopher Clarke said, "There is little competitive pressure either on APRs or insurance. Retailers' primary concern is to avoid having an APR on their store card which is above those of other store cards."

"At the same time, consumers' sensitivity to APR levels and other charges is low. Taken together, this results in store card holders who take up credit and associated insurance paying more than they would in a fully competitive market."

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