Credit card companies are misleading customers with confusing terms, conditions and interest rates, an influential committee of MPs has said.

In a new report, the Treasury select committee argued that issues such as different methods for calculating interest and misleading marketing literature made choosing the best card difficult for consumers.

MPs criticised the government's failure to toughen the rules governing credit cards and condemned the "passive" approach taken by the Office of Fair Trading (OFT).

The MPs called for the establishment of a "summary box" of different charges and rates of interest to be included in the Banking Code and on monthly statements.

The industry should work with both trade ministers and the OFT to establish a "commonly and legally acceptable" basis for calculating the annual percentage rate, said the report.

And the study went on to call for the standardisation of charging methods.

The OFT should issue clear guidance governing the marketing of cards, the MPs argued, while the DTI should conduct a study into whether fees fairly reflect the costs to the issuer.

"Consumers have been badly let down by credit and store card companies," said committee chairman John McFall.

"During December, the Christmas period, £13 billion is expected to be spent on credit cards. Consumers are good for the industry, but the favour is not returned."

The committee also calls for a system limiting the amount of unsolicited credit limit increases, and clearer warnings of the conditions attached to credit card cheques.

Potentially confusing and expensive store cards also come under fire. "The regulatory regime governing credit cards is from a bygone age and is no longer fit for purpose," added McFall.

"The DTI has been busy launching consultations but not acting, and the OFT has been passive.

"We will be monitoring the actions of the industry, the government and the regulators over the next six months to ensure more transparency and competitiveness in the market.

"If we are not satisfied we will come back to this issue. Meanwhile, we wish to work with the industry to help bring about a better deal for consumers and to end some of the endemic obscurity surrounding current industry practices."