Almost two-thirds of people who took out expensive payday loans have used the money to pay household bills or buy essentials such as food, nappies and petrol, a survey by Which? has revealed.

But while payday lenders say the loans help people ease through tricky points of the month, the research indicates many become trapped in a spiral of debt because they cannot afford to repay their loans by the agreed date, and so incur exorbitant penalty charges.

A third of people said they experienced greater financial problems as a result of taking out a payday loan, while one in five were unable to pay it back on time. A quarter said they had been hit with high, hidden charges for reminder letters and failed payments.

Which? highlighted the charges of lender QuickQuid, which has a £12 fee for a missed payment, while CashCall charges £30. Quid24 charges £25 for each of its first four letters to borrowers and £50 for a reminder on the 10th day.

Dan McDonald, chief executive of the Medway Citizens Advice bureau, said his advisers frequently came across people who have borrowed to pay the rent or mortgage and have been drawn into a tangle of debts.

"We recently advised a woman who had a £500 QuickQuid loan, £800 on a Vanquis credit card and £5,000 on an Aqua credit card, but still had £2,000 in rent arrears," he said.

"Private landlords and housing associations are coming down very hard [on people who owe rent], and if people are desperate they will do anything they can to meet their rent payment. It's only going to get worse with the new housing benefit caps."

Which? said the debt trap was compounded with 57% of borrowers being encouraged to take out further loans, and 45% rolling over their loans at least once. Borrowers are usually required to pay the outstanding interest before a loan is rolled over, meaning a lender can make hundreds of pounds in profit from a small loan even if the borrower eventually defaults.

People were also potentially being allowed to take on credit they couldn't afford. Eight out of 34 companies do not carry out credit checks as part of their approval procedure, and nearly two-thirds of borrowers surveyed were not asked about any aspect of their financial situation apart from their salary.

Some payday loan websites failed to provide any terms and conditions, and many of those that did had little or no information about a borrower's rights and obligations. or references to free debt advice. Fourteen out of 34 lenders failed to inform consumers about their complaints procedures.

John Lamidey, chief executive of the Consumer Finance Association, a trade body which represents several payday lenders, said: "Despite the report's concerns that payday borrowers may get 'hooked', the fact is that payday loans actually make up a tiny proportion of overall consumer debt.

"In fact, for every £100 of problem debt, payday loans never make up more than £1.20 of that debt, whereas credit cards and unsecured (mainstream) loans together account for between 60% and 70% of unmanageable debt.

"Responsible payday lenders, such as the CFA's members, have no desire to lend to consumers that cannot afford to pay back their loans or trap them in a cycle of debt."

But debt counselling charity the National Debtline said it had seen a huge rise in the number of calls about payday loans, from 288 in August 2010 to 1,547 in March 2012. The charity said it received 4,725 calls for help with payday loans in the first three months of 2012, 58% more than the previous quarter and 133% more than the same quarter of 2011.

National Debtline spokesman Paul Crayston said: "Payday loans are fast becoming a very serious problem in this country. We have strong concerns over the lending and collections practices of many payday lenders. We have even heard from people who have been approved for payday loans despite being insolvent."

Which? executive director, Richard Lloyd, said: "It is unacceptable for this rapidly growing number of people to be inadequately protected from extortionate charges and dodgy marketing techniques. The regulator should properly enforce the existing rules that apply to this industry, but they must go further and impose a cap on the amount that lenders can charge for defaulting."