Hundreds of thousands of British consumers have been hoodwinked into taking out Payment Protection Insurance (PPI) on their credit cards in the belief that their application would more likely be accepted, says a new study by Which?

Although PPI is normally sold alongside credit cards, loans, finance agreements and mortgages to cover repayments should people be off work because of illness or unemployment, the insurance has been criticised for frequent mis-selling and being high-priced.

A research by Citizens Advice revealed that in some cases insurance companies used aggressive sales tactics to get people who were unemployed or suffering from mental-health problems into taking out PPI despite knowing that they would never be able to claim.

Additionally, advisers are rewarded handsomely for pushing PPI, taking up to 80% of the first year's premiums as commission, according to the commission's report. Sales alongside credit cards account for 22% of PPI sales with annual revenues of £970 million in 2006.

According to Which? more than 9.8 million people have credit cards with PPI attached and 13% of these (1.3 million) were purchased under the false impression that it would improve their chances of their application being accepted.

The Which? survey revealed that credit card providers recommended PPI to their customers saying it was a good idea according to 28% of respondents, despite the knowledge that policies tend to have exclusion clauses and are difficult to claim.