Next pockets 170 million in interest charges from customers

‘Service charge’ to over 2.7 million customers has turned into an extra source of income for high street champion chain Next. The British fashion retailer has pocketed almost 170 million pounds in interest charges from shoppers.

According to data collated by the ‘Guardian’, latest financial results from Next showed 2.7 million shoppers used unsecured credit to buy through Next’s online and catalogue service.

These customers were billed a “service charge” at an annual percentage rate of 24.99 percent if they did not repay the outstanding balance on their Next Directory account and card by a set date each month, explains the London paper.

The interest income accounted for almost a third of the profit Next made on sales to its 2.7 million Directory shoppers, according to the company’s own figures.

Thus, and following Next’s accounts’ small print, in the year to January, the retailer banked 166.4 million pounds, which is nearly a ten percent more than the previous year.

Commenting the news, a spokesman for Next said: “This is a competitive rate in the general unsecured debt marketplace. Customers only pay this rate if they have decided not to pay by cash i.e. via a debit or credit card, and their balance is over, at least, one month from receiving their goods.”

Likewise, the company explained that it uses an “external market-leading credit scoring/credit referencing organisation” to decide whether to lend to shoppers and how much to lend them.