Millions of drivers are inadvertently paying extortionate rates of interest if they opt for monthly premiums instead of a one of payment - a London firm of chartered accountants claimed.

The firm said that the charges made by the insurance companies were as heavy as some of the worst credit card providers. A Treasury Select Committee is currently investigating into credit card charges.

Motorists are tempted into paying monthly when they see the size of the yearly premiums on their renewal notices.

Paul Willans, Director of Financial Planning at Blick Rothenberg said: "For many drivers, the easy option is to select monthly premiums, just like most other insurance policies.”

"However, the majority of insurance companies now charge policyholders heavy interest rates should they decide to do so. Many Insurance companies, make large additional profits by charging APRs of over 23% if their policyholders opt for monthly premiums."

Willans believes it is “deeply disturbing” for such charges to occur when interest rates are at their lowest level since the 1950's and have called for the Treasury Select Committee to investigate these APR rates too.

"These companies are either unaware that interest rates have fallen over the last decade or are simply taking motorists and consumers for a ride.”

“Action should be taken to limit such interest charges to a fixed percentage above base rates, or to name and shame both insurance and store card providers.”

“In the meantime, drivers would be better off taking out a competitively charged personal loan or credit card in order to cut the costs of monthly premium policies."