FRESH warnings about the dangers of store cards were made last week after a ruling by the Competition Commission was criticised for failing to tackle the problems associated with this type of borrowing.

There are 11m store-card customers in Britain, owing a total of £2.3 billion. Yet with many cards charging interest rates of more than 25%, this is a very expensive form of credit. Credit cards charge an average of 15.9%. The Competition Commission believes that store-card customers are being overcharged by more than £55m a year.

Consumer groups were hoping that the Competition Commission’s two-year investigation into the store- card market would result in card providers being forced to reduce their interest rates. Instead, those charging 25% or more will have to put warnings on monthly statements telling customers they may be able to get a better deal elsewhere. This has been criticised for not going far enough.

Lisa Taylor at Moneyfacts, a comparison service, said: “By the time you receive your statement, the damage is done.”

The consumer group Which believes it is the sales process that needs attention, so consumers will know what they’re getting into. Alena Kozakova at Which said: “Many of the shop staff who sell store cards have little understanding of the financial details, yet they are often given an incentive for each sale. This leaves customers in danger of being badly advised and ending up with a very expensive product they don’t need.”

Moneysupermarket.com, another price-comparison service, says if you spend £1,000 on a Burton card, which charges 29.9%, and pay only the minimum each month, it would take you 13 years to pay off the debt, including £1,158.28 interest.

Store-card providers often try to entice shoppers by offering them a discount — typically 10% — on their first purchase with the card. Moneysupermarket’s Robert Kenley said: “If you are making a big purchase such as a kitchen or spend a large amount on clothes, my advice would be to take advantage of the discount, but pay the full amount off within a month, or transfer the unpaid amount onto a credit card that charges 0% on balance transfers.”

The Halifax One card gives a 12-month interest- free period for balance transfers, although you will be charged a 2% balance- transfer fee. Alternatively, the Post Office’s Platinum card has a six-month interest-free period and no balance-transfer fee.

If you can’t afford to clear your store-card balance in full and don’t think you will get round to transferring it to a 0% credit card, don’t be tempted to sign up. Instead, apply for a low-rate credit card and use that to make your purchase. Co-operative bank’s Travel card has a seven-month interest-free period on purchases.