The Easy Shop Card, which is linked to Argos, has been condemed by MP’s and debt experts alike as ” wicked ” and is something that they have been warning people to stay away from. 

As has been revealed by Argos sales this year compared with last are down 9% so a way of getting those figures back up they believe that the Easy Card will help during this vital period.  An example of how the product would work would be is you looked at spending £ 100.00 using this new product.  To repay this over a 27 week period would mean the consumer would be paying back interest of £ 35.00 on top of the £ 100.00 which in itself equates to an APR of 227.  This new product has been produced in association with Provident Financial.

The Liberal Democrat Shadow Chancellor Vince Cable MP says “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 continues “In my view it is wicked to be promoting such high interest cards and loans at Christmas, when people feel under pressure.”

He is not the only person to have a similar view on the new product, Louise Bond from uSwitch said “Despite the recession, life does have to go on but we strongly advise people not to be lured into this type of deal.”

“It may seem like a quick fix but will cost you dear in the long run.”

She added “Despite being attached to a well known high street brand, people shouldn’t be fooled into thinking this is anything other than a sub-prime loan.”

And from the other side the company Provident Financial push the product as a simple way to borrow and spend and the product is advertised on their website as “We have teamed up with high street retailer Argos to give you a great way to shop  -  the Easy Shop card; a plastic card that lets you shop at Argos, without the worry of overspending.”

The word from Argos is “By law, home creditors must advertise their lending rates as an annual percentage rate.”

“Home credit companies have suggested for some time now that APR can be misleading because their loans are repaid over a short time period.”

Provident said “Our charging structure is fundamentally different to that of other lenders.”

“Provident home credit has a single, up-front, fixed charge that customers see from the start, which includes interest on the loan, the cost of the agent’s weekly visit to the customer’s home and the fact that the total amount to repay will never go up  -  even if payments are missed.”

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The last three years has saw figures rise to a staggering 41% compared to 21% back in 2005.  Back in 2005, Nationwide were the cheapest cash withdrawl provider with a rate of 16.9%, but those days are long gone and the Nationwide now join the other providers to date but upping the rate by 85% which today would see 31.2%.  The Nationwide do have the best method for customers to repay this amount back by making sure that the cash withdrawls being the first thing that is paid off on the individuals account which.  Other providers make their customers pay off the whole amount.  Another example of this would be Lloyds TSB who in the last three years has gone from 19.9% to todays rate of 31.91%.

Personal Finance Manager at U Switch, Louise Bond, says “People who use a credit card to withdraw cash may already be struggling under the burden of debt and are forced to resort to this method of borrowing to make ends meet. They can ill afford to pay the exorbitant rates of interest that most lenders are now charging them. While we accept that credit card providers have to make money, and that cash withdrawals carry a higher risk of people getting into bad debt, it is indefensible for companies to penalise their most vulnerable customers.”

“With some providers now charging up to the APR equivalent of almost 32% on cash withdrawals, equivalent to some sub-prime credit card rates, cash rates have become sub-prime rates masquerading as mainstream lending. We now challenge the OFT to investigate whether these rates amount to ‘usury’ or extortionate lending.”

“While the DTI may have intended to simplify things for consumers when they came up with these changes, they have actually caused more confusion. The reality is that most people who use this facility are either unaware of the actual costs incurred, or are so desperate to get their hands on the cash that they don’t care how much it will cost them.”

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With companies such as Virgin and Capital One offering new customers 15 months interest free deals, other providers are now also looking into alternative methods of inticing new business towards their deals.  The future way to gain new customers would be by cutting the balance transfer fee that has been getting more expensive over that last few years.

Barclaycard were the first to introduce this method by taking their 3% transfer fee down to 2.5% on their OnePulse card and along with this they have maintained a lengthy 14 months 0% interest free period on the balance that has been transfered into the bargain.

Money Experts, Sean Gardner said “With 75% of the market currently offering a 0% deal on balance transfers, however, providers are now looking for new incentives to pull in business, and lower transfer fees are a clear solution.”  He also added ” ‘The best-buy tables have been dominated over the last couple of years by cards offering lengthy 0% balance transfer deals, but there inevitably comes a point when trumping the pack becomes impossible.”

It all seems good news for the consumer, who, in the current climate need to be saving anything they possibly can.  For people who are looking to transfer on a new deal, because their current one has expired and they are now on a high APR%, then the lowering of the transfer fee on the new deal is welcome news.

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