By David Burrows

LONDON (Reuters) Unsolicited credit card cheques should be banned, say many consumer groups who blame them for making the problem of ever-growing personal debt levels even worse.

A survey by financial comparison service uSwitch.com found such cheques cost UK consumers 179 million pounds in interest and charges last year.

Over 18 million cardholders had been sent credit card cheques by their card company and 98 percent were unsolicited.

uSwitch has called for a ban on unsolicited credit card cheques and an introduction of tobacco-style ''health warnings'' on them.

The main concern is costs racked up by users: most issuers charge a handling fee, apply cash advance rates to the balance and don't allow any interest free period from the date when the cheque is cashed.

Effectively the terms are typically worse than those offered by the credit card itself.

Voluntary measures introduced by the British Bankers Association and the UK payments association APACS in 2003 were supposed to increase levels of awareness amongst cardholders of the key features of the cheques, such as charges and interest.

But Nick White, head of personal finance at uSwitch, said self-regulation is clearly not working.

''There is a danger that many of the people who these cheques are targeted at will already be at risk of falling into debt, and the 'convenience' of these cheques, coupled with the manner in which they are marketed ... could push them over the edge.'' A spokesman for one issuer, the Halifax, said they had responded to concerns and now spelled things out clearly to customers.

''We do not send out credit card cheques to anyone under the age of 25 and customers have the opportunity to opt out of receiving cheques through the post when they first apply for their card,'' he said.

''They can also opt out at any time by filling in and returning a preference box sent out with every statement.'' NOT ENOUGH However, Mike Naylor at consumer watchdog ''Which?'' said such measures were not enough.

''It should not be a case of opting out,'' he said. ''If customers want these cheques they should be allowed to request them. We would like to see a complete ban on unsolicited cheques.'' Naylor said that it was irresponsible that at a time when UK consumers were being encouraged to reduce their personal debt levels -- by far the highest in Europe -- credit card providers were pushing products like credit card cheques on them.

''Customers are being encouraged to use these cheques to pay for anything from holidays to school fees,'' he said. ''I would also suggest that this argument that they are convenient for paying one-off tradesmen's bills is largely fictitious.

''Most builders and plumbers may not accept a credit card but they will accept a cheque and in most cases they issue a bill and give days or weeks grace before payment has to be made.'' PAYING MORTGAGES The uSwitch survey found that only 30 percent of those who have used credit card cheques in the last year did so in an emergency, and only 22 percent used them to pay a tradesman who would not accept a regular credit card payment.

More worryingly, it said, the same number of people -- 22 per cent -- used credit card cheques to pay money into their bank account. Three percent even used them to pay their mortgage.

With the government set to publish its findings on the current state of regulation of credit card cheques, Naylor of Which? insisted that other issues had to be given a higher profile.

''Most cardholders are unaware that credit card cheques are not covered under section 75 protection as they are when they use their credit card normally,'' he said.

Section 75 of the Consumer Credit Act allows people who buy goods or services on a credit card to claim against the card issuer if something goes wrong, like goods being faulty or the supplier going bust.

Naylor also pointed to higher than average instances of fraud, adding that such cheques if stolen from the post are relatively easy to sign and pay into another account.

''In most cases we would suggest that those who receive these cheques unsolicited should rip them up immediately,'' he said.

REUTERS MQA KP1915