A report by financial groups Moneyexpert and Defaqto estimates that 20% of consumer borrowers have been hit by charges at least once in the last year, with 5% of people paying up to £100 each in charges over the whole of 2005.

The main reasons for the charges were late payments on debts such as credit cards, charges for unauthorised overdrafts, and even exit penalties and settlement fees for repaying loans or mortgages early.

It’s estimated that the total cost of such penalty charges mounts up to a huge £553m a year.

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