Statements for store cards with annual percentage rates (APRs) of more than 25 per cent will have to carry a warning to consumers that they can get cheaper credit elsewhere.
The new rule is part of a package of measures ordered in the final report of the Competition Commission (CC) following an inquiry into the lack of competitive pressure in the sector.
The CC found that store card APRs were, on average, between 10 and 20 per cent "too high" - compared with what they should have been had they reflected providers' costs - during the period from 1999 to 2003 (the gap is slightly smaller if extended to 2005).
As a result, consumers were being ripped off by at least £55m a year, the CC said.
To help rectify this, monthly bills must now display notices of cheaper credit available elsewhere; give clear information about the impact of making only minimum monthly repayments; and offer the option to pay by direct debit.
Card insurance, taken out to cover repayments in the event of illness or unemployment, must also be offered separately, the CC ruled.
Today, more than 11 million store card holders owe more than £2bn. Although store card retailers are plentiful, the market is dominated by a handful of companies, including GE Consumer Finance UK, HSBC and Creation Financial Services.
The changes to the way the cards are sold should be in place within 12 months.
Card fraud: Consumers start fingerprint trial
Co-op shoppers in Oxford can now pay for their groceries with a scan of their fingerprint.
The trial "pay and touch" service launched last week in three stores - part of the Midcounties Co-operative - lets consumers link an electronic scan of their fingerprint to their bank account.
To pay for goods, you simply pass your finger across the scanner; there's no need for a pin.
Although the number of shoppers who have signed up for the free scheme has yet to be revealed, a similar system in the US has more than two million users.
Meanwhile, the arrival of chip and pin technology has helped reduce fraud from counterfeit and lost or stolen cards by nearly £60m.
According to figures from Apacs, the payments clearing body, fraud from skimmed or cloned debit and credit cards fell by a quarter to £96.8m last year.
For stolen or lost cards, cases of fraud dropped by 22 per cent to £89m, from £114.5m in 2004.
The biggest fall was in fraud by crooks intercepting cards in the post. Because of the difficulty of using cards without a pin number, "mail non-receipt" decreased by 45 per cent to £40m.
But fraud using cards on the internet, telephone and for mail order - known as "card not present" (CNP) - rose by a fifth to £183.2m to become the biggest source of plastic crime.
Banks and lenders are now looking at how to counter this growing threat of criminals redirecting their card fraud efforts elsewhere.
Possible measures include development of a handheld chip and pin card "reader" - potentially employing wireless technology - to be used before CNP transactions, and promoting greater consumer awareness of the need to protect card details.
Borrowing: Rates held as house prices look up
The Bank of England has kept interest rates on hold at 4.5 per cent for the seventh month in a row.
The decision came as no surprise to the markets. City analysts had expected a contradictory mix of factors - including indebted consumers, inflationary pressure from rising household bills and steady house price growth - to lead to the decision to leave rates where they are.
Property prices rose by 1.4 per cent in February, according to the Halifax. And Martin Ellis, the mortgage lender's chief economist, said annual house inflation was now running at 5.5 per cent.
"The combination of an improving economic outlook, low interest rates and high employment will continue to underpin a healthy level of housing demand over the next few months."Reuse content