Research conducted on behalf of the Department of Trade and Industry ahead of the publication of the Government’s White Paper on Consumer Credit found that 76 per cent of consumers find the language used in consumer credit advertisements confusing.

As shoppers go into the final run-up to Christmas, many are planning to put seasonal debt on credit cards.

However, consumer groups have warned that many people are tempted by advertisements but fail to understand the small print behind exactly how much they have to pay back.

The MORI poll questioned 1,000 people and found that the wording in credit paperwork confused 84 per cent, with 59 per cent unable to identify the term APR as Annual Percentage Rate.

The survey also showed that half of those who took out hire purchase or a personal loan intended to pay it off early, but just one third (33 per cent) were aware of the early settlement charge.

DTI research shows that two thirds of people aged 20-50 have credit commitments.

Trade and Industry Secretary Patricia Hewitt said: “Consumers are often bombarded by complex loan offers and confused by reams of small print.

“This research shows they need better information when choosing between loan deals, and to be clearer about their rights.”

The government’s White Paper aims, for the first time in 30 years, to make changes to credit card laws to ensure consumers are not mislead. Under the proposals, banks will face fines for misleading advertisements and unfair loan penalties.