ARGOS STORE CARD
|The Argos store card was launched in January 2001 and can be
used at all Argos UK retail stores and also at their online web site. The
card has a reward scheme using the very popular Argos premier points
programme. You can also use the Argos store card by telephone at
Argos Direct catalogue, and even through digital TV. The biggest selling
point of the Argos store card is the 6 months interest free credit facility, allowing
you to buy any goods from the Argos catalogue and not pay any interest if the full
amount is paid back within a 6 month period.|
To cope with the demand that bringing out the store card would generate, Argos UK worked closely with Experian to create a contact/call centre to deal with all things related to the Argos store card. A call centre was opened in Widnes with over 200 sales advisors and managers all specifically trained to deal with questions and queries related to the new card. The store card sector is highly competitive so if any company brings out a card they must offer benefits that at least equal or better their competitors, otherwise we will, or should, look elsewhere for the best deal.
The competition commission reviewed the whole store card industry and they produced a report in 2006 which proves for interesting reading. It showed that women are more likely to hold a store card than men, and that those with more money are more likely to hold a store card as well. The average amount of credit on a store card was around £150, this rose to £250 for people who paid more than minimum amount each month, and upto £850 for those who paid the minimum amount or less each month. Argos UK is one of the very few retailers who actually own and operate their store card themselves.
The report found that 43% of store card holders actually pay off the balance due within the correct time period and so do not get charged any interest. 57% don't pay off the full amount and so get charged the interest. The whole store card industry generates over £600 million per year for these companies, so it is hugely profitable. The interest charges or APR on store cards is usually over 25% and generally much closer to 30%. The interest charges on store cards where found to be higher than those offered on credit cards, so you will be better off if you use your credit card than by taking out a store card. The way they make so much money on these store cards is through interest charges on those of us who don't pay off the balance in the specified time, and also through insurance schemes that are offered when you sign up for the card. This insurance takes the form of payment protection, purchase protection (damaged or faulty goods), price protection (you get a refund when goods are reduced) and also through cross selling of other financial services.
Another problem with the use of store cards is the lack of information on statements. The competition commission recommended that the APR should be clearly stated on the statement in bold, that the interest due next month if the balance is not paid should be made clear, a wealth warning highlighting the consequences of only making the minimum payments each month and finally, a clear indication of the insurance costs incurred each month.
The acceptance levels for store cards are generally higher than those for general credit cards (around 65%), this is because retailers want as many people as they can to use their store card. The acceptance rate for general credit cards is around 50%.Also, the credit limits on store cards is much lower than that on credit cards. Store cards offer around £150 - £1500 depending on your credit check, the initial credit allowed on most credit cards is somewhere between £1000 - £10000.
The recent findings on store cards suggests that the number people taking out these cards has dropped from 13.9 million in 2004, 11.4 million in 2005 and down to 10.7 million by the end of 2006. The reason is mainly due to the fact that retailers are now offering store based credit cards, however the profits are still continuing to grow. One of the major reasons given by customers for using these store cards is the convenience they offer and also the added discounts and special offers available when you have a card. Argos UK want people to get into debt when using their card so they can make money, but even if you use the card and pay the money owed back in time you will more than likely keep on using the card and will still be spending money at Argos or anywhere else you have a store card.
The Argos store card is a good idea and if you use it wisely you can only benefit and it will not rack up huge interest payments. Make sure that you read the small print before you use it, i.e., insurance costs and payment protection and you could save money through using it when you receive discounts or vouchers.