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Borrowers rack up penalty fees.

CREDIT card companies are raking in millions of pounds in penalty fees as one in five customers misses a repayment, figures have shown.

Around 11% of cardholders, more than five million people, were unable to make a monthly repayment during the six months to December 21, according to financial website MoneyExpert.com The group said the figure was a2% increase on the number who were unable to keep up with their credit card debt in the six months to June 4.

It estimated that credit card companies, who typically charge a pounds 12 penalty fee for a missed repayment, will have made around pounds 61m from people's problems.

Sean Gardner, chief executive of MoneyExpert.com, said, "Debt worries have shot up the agenda as people start to count the cost of the UK's borrowing spree over the past few years. Missing a credit card payment comes at a financial cost of pounds 12 a time but there are other factors to consider.

"The effect of a missed payment can last as long as three years on your credit file."

He warned that as companies' lending criteria got tougher, people with impaired credit records would have to pay more to borrow.

The research comes a week after figures showed nearly half a million homeowners have missed a mortgage repayment in the past six months, as last year's the interest rate hikes hit.

You Gov questioned 2,082 people during December
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Title Annotation:Business
Publication:Western Mail (Cardiff, Wales)
Date:Jan 30, 2008
Words:239
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