The Competition Commission has at last moved to shame credit cards in to cutting their charges. The move comes after the Commission concluded that the industry was overcharging customers up to £100 million each year through excessive interest rates and other charges.

The main culprits were found to be store cards which were charging up to 30.9% interest even though the Bank of England’s base rate stands at just 4.5%. The worst culprits were TJ Hughes and the Faith Card who you can see heading the Table of Shame shown later in this article.

In addition, the commission came down on high penalty charges for missed or late payments and Payment Protection Insurance. Penalty charges currently average £15 per event – but the Commission argue that these charges are also excessive.

As for Payment Protection Insurance, the Commission has decreed that whilst this insurance can be a good idea, credit card operators have abused it. Therefore, Payment Protection Insurance must no longer be sold as a package with a credit card; it must always be purchased as a separate transaction. That’ll be good news for the Internet where all the cheapest Payment Protection Insurance deals can be found with premium savings up to 60% in comparison with credit card and loan packed arrangements.

The new rules from the Competition Commission mean:

· If a credit card charges more than 25% interest, it must carry a warning that there are cheaper ways to borrow. These warnings must be displayed on each monthly statement.

· The interest rate and penalty charges must me clearly displayed on the front of every monthly statement.

· The monthly statement must also warn of the consequences in terms of higher interest charges, of only paying the monthly minimum repayment.

· Cards must offer the option for customers to clear their monthly balance each month by an automatic direct debit. This avoids any possibility of interest charges and late payment penalties.

· Credit Card operators can no longer sell Payment Protection Insurance packaged with the credit card. They must be both separate and optional transactions that enable purchasers to see the true cost.

These new rules seem certain to shame retailers into cutting their charges – that’s not to say that 25% pa interest is a snip! Main line credit cards are currently charging circa 14% to 18% and we think that’s too high! Indeed, between 80% and 90% of store cards are charging more than 25% and are held by some 11.5 million customers. But some retailers have already realised that their sky high charges couldn’t be sustained and have taken steps to trim back. Harvey Nichols has already trimmed their interest from 28.5% to 21.9%, River Island has gone down from 29.9% to17.9% and Monsoon from 29.9% to 18.9%.

But who are the bad boys? Here’s our Table of Shame:

TJ Hughes 30.9%
Faith Card 30.9%
Owen & Owen 30.7%
Burtons 29.9%
Dorothy Perkins 29.9%
East 29.9%
Evans 29.9%
HMV 29.9%
JD Sports 29.9%
Kwik Fit 29.9%
La Senza 29.9%
Laura Ashley 29.9%
Miss Selfridge 29.9%
Russell & Bromley 29.9%
Ted baker 29.9%
Topshop/Topmam 29.9%
Wallis 29.9%
Warehouse 29.9%
House of Frazer 29.3%
Bhs Gold Card 29.0%
Habitat 29.0%
Oasis 29.0%
Harrods 28.9%
Fenwicks 27.9%
Selfridges 27.6%
Bentalls 27.2%
Jaeger 27.1%
B&Q 26.8%
French Connection 26.8%
Argos 25.9%
Homebase 25.9%
New Look 25.9%
Note: Some of these cards offer lower rates for payments by Direct Debits
Source: Competition Commission/Moneyfacts March 2006