Consumers want transparent interest rates

The firm is working with HSBC to launch the card, which it will initially offer to staff and current John Lewis and Waitrose store card holders.

Store cards have recently come under fire for having sky-high rates of interest and harsh terms.

John Lewis says its new credit card's interest rate will be 13%.

It said the rate was lower than that paid by 80% of its store card holders - although it is the same as the standard rate advertised for store cards on John Lewis's website.

Still, many mainstream credit cards have higher rates, and some store cards can have interest rates of as much as 30% APR.

Inquiry

That, and alleged distortion of competition, is what has provoked the Office of Fair Trading into referring store cards to the Competition Commission.

The consumer who did nothing might find themselves with a credit card instead of a store card John Vickers, OFT Are store card issuers planning to switch customers to credit cards?

The OFT's investigation of the �4.8bn sector - more than 20 million store cards are in circulation - suggested that finance firms locked some retailers into 10-year deals, preventing them from switching to providers offering better terms.

The UK's biggest store card provider GE Consumer Finance denied this was the case, saying there was "vigorous competition" between credit providers and "many recent examples of retailers changing suppliers".

The OFT also said that some shops themselves did not allow customers to take forms away with them, stopping them from properly reading the small print.