SHOPPERS who use online and catalogue company Studio are being urged to check their statements as some say they’ve been hit with new interest rates of up 54.5 per cent.
Thousands of people have commented on a Facebook post about the increases, often claiming they weren’t even told about about the changes in advance.
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Michelle Lye, who wrote the initial warning on the Extreme Couponing and Bargains UK Facebook group, told The Sun she’s been using the catalogue for years with an interest rate of around 29 per cent.
But she says she was shocked when she received a letter just before Christmas saying her interest rate was increasing to 49.9 per cent.
And the 42-year-old housewife from Kent says her daughter and dad, who also have Studio catalogue accounts, have had their rates upped without any notice at all.
She said: “I always pay by balance on time and I’ve only incurred a little bit of interest over the years but Studio sent me a letter saying they were reviewing my account and putting up the interest.
How to get help for free
THERE are lots of groups who can help you with your problem debts.
- Citizens Advice – 0808 800 9060
- StepChange – 0800 138 1111
- National Debtline – 0808 808 4000
- Debt Advice Foundation – 0800 043 4050
You can also find information about Debt Management Plans (DMP) and Individual Voluntary Arrangements (IVA) on the Money Advice Service website and on the Government’s Gov.uk site.
Speak to one of these organisations – don’t be tempted to use a claims managment firm that will say it can write-off lots of your debts in return for a large up-front fee.
“There was no explanation why and they couldn’t really explain it when I spoke to them on the phone either.
“My daughter and dad have got an account too but they didn’t receive a letter.
“It’s disgusting. It’s really hard for people to go out and buy things upfront, so lots of people rely on this and they won’t notice or be able to afford the interest hike.
“It’s putting people in debt, which causes serious stress. I’m lucky that my account only had around £40 to £50 on it so I was able to pay it off and close it.”
Michelle’s post has since received over 3,700 comments, many from worried shoppers.
One person wrote: “Thank you for sharing, I just looked and mine went up too (didn’t even know)!!! I only have a couple more payments left and when I’m done I’m closing my account.”
Another said: “I checked mine, fuming is not the word, mine’s 54.5 per cent.”
Someone else added: “Just checked my statement… 49.9 per cent… I was never notified. Once my account is paid I won’t be using them again. Thanks Michelle.”
Another grateful shopper wrote: “Thank you for the heads up, I’ll be paying off my bill ASAP!!”.
Studio wouldn’t tell The Sun how many shoppers are affected, what rates have been hiked to and from or when the change came into force.
It only said that the move was due to changes to customers’ credit profiles and market conditions.
How to cut the cost of your debt
IF you’re in large amounts of debt it can be really worrying. Here are some tips from Citizens Advice on how you can take action.
Check your bank balance on a regular basis – knowing your spending patterns is the first step to managing your money
Work out your budget – by writing down your income and taking away your essential bills such as food and transport
If you have money left over, plan in advance what else you’ll spend or save. If you don’t, look at ways to cut your costs
Pay off more than the minimum – If you’ve got credit card debts aim to pay off more than the minimum amount on your credit card each month to bring down your bill quicker
Pay your most expensive credit card sooner – If you have more than one credit card and can’t pay them off in full each month, prioritise the most expensive card (the one with the highest interest rate)
Prioritise your debts – If you’ve got several debts and you can’t afford to pay them all it’s important to prioritise them
Your rent, mortgage, council tax and energy bills should be paid first because the consequences can be more serious if you don’t pay
Get advice – If you’re struggling to pay your debts month after month it’s important you get advice as soon as possible, before they build up even further
Groups like Citizens Advice and Money Advice Trust can help you prioritise and negotiate with your creditors to offer you more affordable repayment plans
Under the city watchdog’s rules, credit companies are allowed to increase rates on credit cards and retail credit agreements if they have a valid reason for doing so.
This could include increased costs to lend in the first place or a change to the customer’s circumstances.
But where they do this, firms have to give customers 60 days’ notice of any hike, during which unhappy users can cancel and close their account.
If there are debts on your account, firms have to allow you to pay it off at the old rate over a “reasonable period” – although there’s no set definition of what this means in reality.
Unhappy shoppers should first complain to Studio about any rate hike and try to come to an agreement over repayments.
If you don’t get the response you want or don’t hear back within eight weeks you can take your complain to the free Financial Ombudsman Service.
A spokesperson for Studio said: “At Studio we take changes to customers’ interest rates very seriously.
“As a Financial Conduct Authority regulated lender we always communicate any changes and the effective date, in advance of this taking place.
“We occasionally review interest rates based on changes to customer credit profile and changing market conditions.”
The move by Studio comes as many of the big banks have announced they’re upping interest rates on overdrafts this April.
If you’re struggling, here’s how to get out of debt in eight simple steps – and get advice for free.
We also round-up how the snowball method could help you pay off debts.
