The days when pushy staff used to flog store cards at the till were thought to be over, following a clampdown on aggressive sales tactics and immediate discounts for signing up.

 

But new research and employee testimonies show that a 'buy now, pay later' culture is still alive at the big retailers, with some shoppers paying a high price for this luxury.

Before 2011, retailers typically paid commission to staff whenever they sold a store card and offered shoppers upfront price reductions as an incentive.

That year, the government intervened, banning commission and ordering shops to implement a seven day window before shoppers could grab discounts.

A voluntary code of conduct was put together with help from the British Retail Consortium and the Finance and Leasing Association, which represents store credit providers, to help retailers stick to the new regime.

Despite a ban on commission, big high street chains still give 'benefits' to staff who sell branded credit cards at the checkout.

Writing on the company review site Glassdoor, one former employee at the House of Fraser store in Edinburgh said she had been put under "a lot of pressure" to sell its Recognition Mastercard, which charges between 19.9% and 24.9% APR, while working part-time at the store for three years. Other users reported similar experiences, with one claiming that failure to sell enough cards led to redundancy.

A House of Fraser spokeswoman said: "There are certain benefits to our staff who sign-up new customers to our Recognition MasterCard - however their jobs are not contingent on card sales numbers.".

A spokeswoman for Debenhams said: "Staff are offered benefits for store card activity, all of which full comply with the FCA rules and principles around selling credit products." The retailer had made a "strategic decision" to move to a MasterCard product following customer feedback in 2012. The new in-store credit card allows customers to earn points on purchases in shops other than Debenhams. BHS also has also shut down its store card in recent years, but would not confirm why.

James Daley, founder of Fairer Finance, said some stores were now moving towards branded credit cards, which charge a lower interest but carry similar dangers. He said: "For some people, these cards can be a very good deal if they pay off the balance in full because you take advantage of big discounts. But the problem is that many of these cards have to be sold to people who are disorganised with their finances and will have to pay back the interest in order to be profitable for the retailer."

According to Moneyfacts, store cards are still operated by Miss Selfridge, Warehouse (charging APRs of 29.9 per cent) New Look, Oasis, Karen Millen (all 28.9 per cent) and Topshop/Topman (19.9 per cent). Two other big retailers with cards charging 29.9 per cent, Argos and Homebase, told The Herald that as "responsible retailers" they had no staff incentives to sell them.

Nearly a third of Scots are using credit on store cards or through catalogues, according to the Debt Advisory Centre Scotland. Out of those consumers, 15 per cent are in arrears and can expect to pay twice the interest usually seen with credit cards, as well as an array of penalties.

The DACS research confirmed that 25-34 year olds are most vulnerable to store card debt, with a quarter of users in this age group falling a month behind with their repayments

Stuart Carmichael, chief executive of the Glasgow-based Debt Support Trust, a charity which is a free alternative to fee-charging firms like DACS, said: "The general availability of credit has been in decline recently, so a store card ensures people can make the purchases they want today, instead of waiting and saving.

"Store cards are often made available to young people who may not understand what they are agreeing to and don't realise the implications of failing to pay the money back on time."

The Finance & Leasing Association said 'online credit' was now becoming a more popular option for shoppers. It is thought that these virtual store cards are mostly behind the year-on-year increase - 9 per cent - in retail credit up to November 2014, the last month recorded by the FLA.

Fiona Hoyle, head of consumer finance at the FLA, said: "Store card business is now a very small component of the retail store and online credit market, a broader sector which includes lending by high street stores for consumers to purchase items such as furniture and other household goods. Responsibly provided credit helps people to plan their finances."

A spokesman for Stepchange, the national debt charity, said store cards were one of many products that caused problems for their clients, contributing to a bigger debt package worth £1,075. He said: "People should think very carefully before taking on any form of credit. Is it affordable and can you afford to pay it back without incurring interest and charges?"

The Financial Conduct Authority is currently investigating lenders having taken over regulation of the consumer credit market in 2014. A spokeswoman for the FCA said: "Retailers will form part of our ongoing study, should that prove relevant to our whole assessment, which is quite comprehensive and wide ranging. We will not necessarily be scrutinising the details of incentives offered by every single provider.

"We have published our terms of reference for our study. We have not gone into this area with pre-conceived ideas about what we expect to find. We want to assess how well the credit market is working well for customers."