More than one in 10 people were hit with a penalty charge on their credit card during the past year, research showed.

Around 11 per cent of people had to pay a charge for failing to make their monthly repayment on time, or exceeding their credit limit during 2005, according to research by website MoneyExpert.com and financial information group Defaqto.

At the same time, one in five people admitted they did not fully understand how their credit card worked.

Last year the Office of Fair Trading wrote to eight major credit card companies after provisionally deciding the charges they imposed for things such as late payment were excessive.