Consumers who use credit card cheques could be facing £57 million a year in unexpected fees and interest payments, the Office of Fair Trading (OFT) has warned.

The regulatory body is calling for legislation to protect consumers from such charges after it discovered that most people were unaware of them.

Only a third of people surveyed by the OFT said they knew they were charged immediate interest on cash borrowed through a credit card cheque, and almost one fifth believed the interest rate they paid was the same as on credit card purchases.

Many consumers are also unaware that items bought using a credit card cheque may have less protection under the Consumer Credit Act than those purchased with a credit card, the OFT says.

It believes that more information is needed to inform consumers about credit card cheques and their associated costs so that they can make clued-up decisions about their spending.

It is calling on the government to introduce new legislation to ensure that clear and up to date information is provided for anyone using the cheques.

John Fingleton, chief executive of the OFT, said: "Consumers need good quality information about the costs and other potential disadvantages of credit card cheques before they consider using them.

"This isn't always happening and we urge the Government to introduce legislation to protect consumers."

The OFT's demands come in response to a Department of Trade and Industry consultation paper on the issue of credit card cheque transparency in November 2005.