By Andrew Verity BBC personal finance reporter

GE Consumer Finance provides store cards for Top Shop

Credit card companies behind expensive store cards have been accused of being "designer loan-sharks" by a committee of MPs.

In angry exchanges, the Treasury select committee also said the companies were "fleecing customers" with interest rates nearing 30%.

Given that Bank of England base rates are at 3.5%, MPs said, this was "usury".

As part of their inquiry into credit cards, the MPs were grilling three companies involved in store cards.

Savage response

GE Consumer Finance, the biggest store cards provider with 10 million customers, came in for the greatest criticism.

GE, owned by US finance giant GE Capital, is behind store cards at House of Fraser and Arcadia, the retailer that owns High Street brands such as TopShop, Burton and Dorothy Perkins.

The MPs pointed to interest rates on a store card at Toys "R" Us, at 32.5%.

That is four times the rate of market-leading credit cards, and more than twice as much as John Lewis' store card at 13%.

"Are they top of the league of upmarket rip-off merchants or are there others which are higher?" asked one MP.

Seamus Smith, of GE consumer said: "The competition is in the hands of the consumer."

That provoked a savage response from the MPs, who pointed out that retail customers rarely get the opportunity to check terms and conditions when they sign up.

The MPs' researcher was denied the opportunity to take away an application form to review its terms and conditions overnight.

'Highway robbery'

In fact, House of Fraser, which is in partnership with GE, prevents customers from taking store card application forms, which set out the interest rate, out of the store.

On the committee Norman Lamb MP said: "You keep away from customers the real information that they need to make an informed decision."

Chairman of the committee John McFall said the policy amounted to "highway robbery".

Initially Mr Smith claimed the Consumer Credit Act 1974 prevented shop assistants from allowing customers time to look at the application forms.

However, he later backed down and said it was not against the law and the policy could be reviewed.

Mr Smith admitted retailers do in some cases benefit from the use of store cards, sharing in the profit stream.

Socially responsible?

Both he and representatives of House of Fraser and Arcadia said their interest rates could not be as low as others because customers borrowed less - typically �300 each.

Other credit card companies had the same fixed costs - such as running a call centre to handle calls - but customers held bigger balances on their credit cards. That meant they could recover their costs with lower rates.

But MPs also pointed out how profitable the store cards were. By marketing GE's store card, House of Fraser made a profit of �13.5m on turnover of �20m in 2002.

Chairman John McFall also criticised companies such as Arcadia for encouraging young people to run up debts by offering 10% discounts on fashion items in exchange for accepting a store card.