New UK card has 227% interest rate
One of the most expensive credit cards to ever hit Britain’s wallets was revealed this month and it has a whopping interest rate of 227%.
Argos card has 227% interest rate
A lot of people are finding it increasingly difficult to borrow from the mainstream high street banks.”
The card is being launched by high street giant Argos as a saviour for families who are going to find buying gifts tough this Christmas, however it has been described as ‘wicked’ by some critics.
In fact, MPs and debt professionals recently warned anyone struggling financially to steer clear of the new card.
The Easy Shop Argos credit card comes at a time when a lot of us are tightening our purse strings and Argos is actually 9% down on their profits for the first time this year.
Many critics see the card as a cynical way for the company to make more money at a time when most families are suffering financial hardship.
False economy
A customer buying £100 worth of toys and gifts could make repayments on the card of £5 for 27 weeks totalling £135, which works out as an APR of 227%.
Provident Financial have supplied the card and services to Argos and the card works out as having a similar APR to some Pay Day Loans which have received a bad press recently and are thought to take advantage of those most in financial trouble.
The 227% rate isn’t only based on the interest the card charges but also the way the loan is repaid to Argos and how long it takes.
Shadow Chancellor Vince Cable of the Liberal Democrats was the first person to publicly describe the card as ‘wicked’.
Mr Cable has long warned of the damage which irresponsible lending has on both personal finance, personal well being and on the greater economy.
Desperate times
Personal debt in the UK is now in excess of £1 trillion, a number which it is hard for many of us to imagine.
Mr Cable said: “A lot of people are finding it increasingly difficult to borrow from the mainstream high street banks.
"Many may well feel they have to fall back on things like this. There is a real risk of a very large number of people being exploited as a result.”
He also criticised the UK authorities for not being stricter with lenders, saying that regulation in the country was "utterly feeble".
He also implied that offering people products with such high interest rates over the Christmas period was unethical as people feel “under pressure”.
Experts at uSwitch.com also slammed on the card.
“Despite the recession, life does have to go on but we strongly advise people not to be lured into this type of deal,” a spokesman said.
“It may seem like a quick fix but will cost you dear in the long run.”
Finally
This sort of deal appeals to many people, simply because weekly repayments can be made over a long period and £5 a week doesn’t sound like much, but £20 pounds a month sounds more substantial and could easily be minimum repayments on a proper credit card for far greater balance than £100.
Experts urge shoppers to do sound maths and make responsible choices this Christmas if they don’t want the credit crunch and their own financial struggle to worsen.
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