Consumers warned on Christmas credit traps

Tuesday, 28 October 2008 08:01

Consumers are warned to avoid 'subprime' credit this Christmas, despite a connection with trusted high street brands.

Comparison website uSwitch.com has accused Argos of targeting vulnerable consumers this festive season through the retailer's partnership with Provident Personal Credit.

Provident is offering an 'Easy Shop Card', an Argos gift voucher pre-loaded with credit.

However, shoppers using the card will be charged 222.7 per cent APR, spread over the six months.

Louise Bond, personal finance manager at uSwitch, said: "Despite being attached to well known and trusted high street brands, people shouldn't be fooled into thinking these deals are anything other than a subprime loans with inflated APRs.

"It seems they really are just cashing in on desperate consumers who need relatively small amounts of money quickly. These vulnerable customers may not care how much they have to pay back as they are just focused on getting through the Christmas period."

Argos said it does accept the card, but denied it promotes the product.

"We are not involved in offering the credit facilities, determining credit worthiness or setting interest rates for the card.

"Nor do we manage any marketing or promotion of the card. The Easy Shop card is not promoted on the Argos website or in any other Argos marketing materials as it is a Provident product," a spokesperson said.

Moneynet.co.uk has also identified several credit traps to avoid over the Christmas period, a time when many cash-strapped consumers feel pressured to spend heavily.

Pay-day loans, log book loans, credit card cheques, credit card cash advances and unauthorised overdrafts are all to be avoided, Moneynet.co.uk advises.

"Billed as the easy, no-hassle way to bridge the gap until payday, these are the very worst villains of the piece, with interest rates equating to 1,355 per cent," said Moneynet's Andrew Hagger.

"With the expense of Christmas and the big winter fuel bills looming on the horizon, cutting back is difficult but falling into the trap of these five financial follies could prove disastrous for many," Mr Hagger added.

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