MPs have continued their war against credit card companies with a hard-hitting report calling for greater consumer protection.

In a new report released on Friday, the Commons Treasury select committee found that despite some progress, lenders still need to provide more joined-up and transparent information and do more to avoid borrowers falling into unmanageable debt.

The committee has become increasingly concerned with credit card lenders in recent years, as low interest rates have led to an explosion of borrowing.

And while the report praised the progress that has been made in providing recent innovations such as summary boxes of charges and costs, it found that customers are still confused by interest rate calculation, creating an "illusion that a deal is better than it really is".

It also concluded that while interest rates may be relatively low, fees for late or bounced payments and exceeding credit limits, remain suspiciously high.

Investigation

Committee chairman John McFall said the Office of Fair Trading was right to launch an investigation into the practice.

"Credit card companies maintain that these charges represent a fair recovery of the costs involved," he said.

"However, it is impossible for the public to have any real confidence in their claims. None of the chief executives would reveal figures, arguing that they were commercially sensitive.

"I strongly welcome the investigation by the OFT into these tactics and hope their report will ascertain whether fees are being used as an excuse to take more money from cardholders."

Further findings included a demand that lenders stop sending out unsolicited credit card cheques with punitive rates of repayment and a call for the industry to share information on customers to stop excessive debt building up within households.

"Cases of extreme debt are growing so the need for companies to share information on customers has never been greater," McFall said.

"Credit card companies, together with the government, must work to achieve this. By sharing information on customers, and encouraging responsible borrowing, credit card companies can provide people with better advice and prevent consumers from building up unsustainable debts."