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Cape Town - Store card promoters are woefully clueless in informing consumers about store card fees and charges, a survey by consumer advice website Moneybags has found.
Store cards are expensive compared with other lines of credit such as credit cards. The average store card charges 21% which is the maximum prescribed under the Regulation 42 of the National Credit Act.
Earlier this month, Moneybags went undercover to ten shops that offer store cards at the Cavendish in Claremont, Cape Town. The stores approached were Guess, Queenspark, YDE, Woolworths, Edgars, Markham, Truworths, Stuttafords, Foschini and Forever New.
In its second annual store card survey, Moneybags asked shop assistants for details of the interest rate and late-payment charges and found that seven out of ten promoters didn’t know what the interest rate charges were on the store cards or provided Moneybags with the incorrect rate.
Only three shop assistants could correctly answer questions about interest rate charges and fees associated with opening the store accounts. This was slightly better than 2012’s survey where only two shop assistants could correctly answer all the questions put to them by Moneybags about important details like interest rates and late payment charges.
The trawl of the ten fashion retailers showed no consistency with last year’s findings. For example, a Woolworths employee working at the customer enquiries desk didn’t know the interest rate and charges of the card this year but last year a Woolworths employee correctly stated the interest charges.
Moneybags editor Angelique Ruzicka said some consultants provided figures but these were inaccurate and sometimes higher than the actual rate quoted by each stores’ customer call centres or PR departments.
Ruzicka said opening up a store account is an expensive exercise but very few store promoters know or can correctly state what the interest rate charges and fees are for opening the accounts.
"Some stores charge a card maintenance fee; initiation fee and ask you to take out card protection insurance which they say is compulsory. So on top of paying interest charges (usually 21%) you could pay as much as R178 in fees depending on how you use your card,” she said.
The maximum charges quoted to Moneybags researchers came from Guess. Guess’ initiation fee ranges from R0 - R90 based on credit record scores. A monthly service fee also applies from R28-58 (dependant on the credit you get) and customer protection insurance from R4 - R30.
“Store cards should be avoided if you are not good at managing your money. But if you are disciplined they could work for you.
"Some have six month revolving plans that don’t charge you interest on your balances. But if you don’t pay your outstanding amount off within six months then you will be charged interest,” Ruzicka advised.
Ruzicka called for increased transparency by retailers to help consumers make informed choices and placing them in a position to make better decisions in the way they manage their finances.
Store cards are expensive compared with other lines of credit such as credit cards. The average store card charges 21% which is the maximum prescribed under the Regulation 42 of the National Credit Act.
Earlier this month, Moneybags went undercover to ten shops that offer store cards at the Cavendish in Claremont, Cape Town. The stores approached were Guess, Queenspark, YDE, Woolworths, Edgars, Markham, Truworths, Stuttafords, Foschini and Forever New.
In its second annual store card survey, Moneybags asked shop assistants for details of the interest rate and late-payment charges and found that seven out of ten promoters didn’t know what the interest rate charges were on the store cards or provided Moneybags with the incorrect rate.
Only three shop assistants could correctly answer questions about interest rate charges and fees associated with opening the store accounts. This was slightly better than 2012’s survey where only two shop assistants could correctly answer all the questions put to them by Moneybags about important details like interest rates and late payment charges.
The trawl of the ten fashion retailers showed no consistency with last year’s findings. For example, a Woolworths employee working at the customer enquiries desk didn’t know the interest rate and charges of the card this year but last year a Woolworths employee correctly stated the interest charges.
Moneybags editor Angelique Ruzicka said some consultants provided figures but these were inaccurate and sometimes higher than the actual rate quoted by each stores’ customer call centres or PR departments.
Ruzicka said opening up a store account is an expensive exercise but very few store promoters know or can correctly state what the interest rate charges and fees are for opening the accounts.
"Some stores charge a card maintenance fee; initiation fee and ask you to take out card protection insurance which they say is compulsory. So on top of paying interest charges (usually 21%) you could pay as much as R178 in fees depending on how you use your card,” she said.
The maximum charges quoted to Moneybags researchers came from Guess. Guess’ initiation fee ranges from R0 - R90 based on credit record scores. A monthly service fee also applies from R28-58 (dependant on the credit you get) and customer protection insurance from R4 - R30.
“Store cards should be avoided if you are not good at managing your money. But if you are disciplined they could work for you.
"Some have six month revolving plans that don’t charge you interest on your balances. But if you don’t pay your outstanding amount off within six months then you will be charged interest,” Ruzicka advised.
Ruzicka called for increased transparency by retailers to help consumers make informed choices and placing them in a position to make better decisions in the way they manage their finances.
