Argos attacked over "sub-prime" credit card

A leading UK retailer has been criticised after putting its name to credit card that charges customers almost 400% APR.

Catalogue store Argos has joined forces with home credit provider Provident Financial to offer a credit card with an advertised APR of 399.7% which can only be used with the retailer, attracting fierce criticism from financial experts and MP’s.

The ‘Easy Shop Card’, aimed at customers who may otherwise struggle with finances in the run-up to Christmas, offers credit up to £500 to be used in Argos stores, with customers then being asked to make a series of weekly payments. In an example listed on the Provident Financial website, a customer borrowing £200 would be required to make 32 weekly repayments of £10, totalling £320 and an APR of 399.7%.

The Liberal Democrat Shadow Chancellor Vince Cable MP, who has previously warned consumers over spiralling levels of personal debt, described the marketing of cards and loans with such extortionate interest rates as “wicked”.

He said: “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 added: “In my view it is wicked to be promoting such high interest cards and loans at Christmas, when people feel under pressure.”

Louise Bond, personal finance manager at uSwitch, said that such offers were effectively "sub-prime loans with inflated APRs" and accused the lenders of "cashing in on desperate consumers who need relatively small amounts of money quickly".

She added: “Despite the recession, life does have to go on but we strongly advise people not to be lured into this type of deal,' she said.

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

“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.”

Provident Financial have however defended the card, claiming that the use of APR figures is misleading.

The group said the £35 for borrowing £100 was a charge rather than an interest payment, adding that people would not face additional penalty charges or interest if they got behind with repayments.

It added that the APR figure, which legally must be displayed in any marketing material, was misleading due to the short time frame in which the loan was repaid.