Nearly five million credit card holders in the UK had to pay penalties on their cards, which constitutes ten per cent of the population, according to a report commissioned by financial comparison website MoneyExpert and research company Defaqto.

These penalties were charged for offences such as late payments or going beyond credit limits.

Alarmingly, the study found that around 20 per cent of cardholders are ignorant of the way in which a credit card actually works.

“A single late credit card payment can cost as much as £35 so it is worth handling your finances well,” said Sean Gardner, chief executive at MoneyExpert.

“It is worrying that so many people do not feel adequately informed about their credit cards. The current market puts such an emphasis on interest rate that people may have lost sight of the complexities of some financial products.”

Mr Gardner adds that consumers should not even think about taking out a financial products if they do not “fully understand” what they are buying.

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