According to a recent survey, one in five UK consumers had to pay a penalty fee or charge on a financial product in 2005. But it is much higher in the US.
Late payment of credit card debt was the main reason for penalties being imposed, according to financial groups Defaqto and MoneyExpert.
Nearly one in twenty consumers racked up £100 in financial penalties and charges.
Overall, the groups believe 7.8 million people paid out £553m in penalty fees and charges during the course of 2005.
In addition to late repayment of credit card debt, other common reasons for consumers being hit with penalties and charges included breaching overdraft limits and repaying a loan or mortgage early.
Time pressure
Sean Gardner, chief executive of MoneyExpert, said that consumers often ended up paying penalties because they did not have the time to look after their finances.
"It’s therefore difficult for many time-pressured people to make the most of their money, research financial products and ensure they don’t fall foul of a minefield of costs and charges levied by providers," Mr Gardner said.
But it seems many consumers are looking to take greater control of their finances in 2006 and avoid penalties and charges.
Nearly one in four plan to reduce their debts and 6% aim to move their mortgage to another provider, the survey suggested.
