A graduate student with over £19,00 of debt has been offered just shy of £3,000 of store card credit in less than two days … having earned less than £1000 this year!
The 21 year old was offered a total of six store cards with a combined value of £2,750, announced recently by consumer magazine Which? Money.
Posing as a customer, the graduate visited 20 high street stores to buy items between £50 and £100 and asked if he could get discounts if he took out a store card. Despite having 12 credit checks carried out over two days, he was still able to get credit at the end of day two.
Out of the 12 stores, 8 of them filled out the forms on his behalf, not giving him the chance to review any small print or terms and conditions and just requesting he sign the form at the bottom.
Furthermore, just 1 of the 12 stores actually advised the undercover graduate that he would be subject to a credit check. The interest rates charged on the credit ranged from 18.9% to 28.9%, and in one case it would have taken him nearly 21 years to clear the debt if he had made only the minimum repayment each month.
BHS initially offered him a store card with £100 credit, but then sent him a credit card with a £1,500 credit limit, although it had mistakenly used the name of his street for the name on the card.
Which? Money editor James Daley said “No one in his position should be given access to £2,750 on store and credit cards in just two days, or be able to continue getting credit after so many applications have been made in such a short space of time. The question remains whether stores should be handing out credit at all. If shops can’t lend responsibly, then the Office of Fair Trading should step in to make sure they do.”
The group is calling on retailers to work more closely with credit reference agencies such as Creditsure to ensure they know customers’ circumstances better before they lend to them.
It is also calling for sales staff to be given better training and for checks to be carried out to ensure shop assistants are asking for consumers’ permission before credit checks are carried out.
