Cost Of Credit Card Mismatch: £120m

More than three million of credit card holders could have picked the wrong card for their needs resulting in a potential bill of £120 million in interest charges.

Almost 50 per cent of all card holders claim they mainly use their credit card to make purchases but only 11 per cent chose their card because it offered a low interest rate for this purpose, according to research by price comparison website moneysupermarket.com.

Only six per cent of Brits use their credit card for transferring a balance of existing debt although 15 per cent looked for the best balance transfer deal when searching for a new card.

"Don't be taken in by the headline rates on offer because the cheapest deals do not automatically signal that the card is right for you," advised Rob Kenley from moneysupermarket.com.

"As always, when it comes to financial products a bit of planning and research will help you minimise the risks of paying more than you need to."

The figures also show that two out of five card users do not clear their balance in full each month meaning they become a victim of negative payment hierarchy – where the banks clear the cheapest debt first.