Labor frontbencher Sam Dastyari has called on the big banks to put an end to "gouging" on credit card fees as the federal government is urged to change the rules.
Labor and coalition senators have called for credit card users to be able to switch providers more easily as well as standardised minimum repayment requirements, in a parliamentary inquiry report released on Wednesday.
Senator Dastyari, who chaired part of the inquiry, said four banks were controlling 80 per cent of the credit card market.
He said the report should serve as a "wake-up call" to the banks and said it was up to both government and consumers to take action.
"Let's call it for what it is - gouging," he told ABC radio on Wednesday.
"It's a rort. It's been a rort. It continues to be a rort."
At the end of the June quarter, Australians had $51.5 billion in credit card debt, of which $33.1 billion was accruing interest.
While the cash rate has fallen to two per cent, the interest rates for standard credit cards is around 20 per cent, with low-rate interest cards around 13 per cent.
The Senate inquiry found credit card providers had made cancelling a card difficult, with many customers opting to open a new account rather than go through the hassle of closing the old one.
This meant that rather than have a new account with a lower interest rate and fees or other benefits, they were left with a more complicated arrangement and greater financial risk.
The report said the government should look at ways to more easily enable switching, including the idea of account number portability for credit card accounts and a "click and close" online system.
Coalition senators agreed with their Labor counterparts on the idea of setting a standardised minimum repayment requirement, and alternative ways to reduce the use of credit cards as long-term debt facilities.
They pointed to the British model which has more stringent checks and a minimum repayment formula that sees repayments calculated on the basis of interest, fees and one per cent of the principal.
However, any minimum repayment would need to ensure it did not hurt disadvantaged or vulnerable consumers, or push them towards riskier borrowing such as payday lending.
The report said credit card advertising and marketing material should clearly disclose the cost of a credit card, including the headline interest rate and ongoing annual fee.
More work should be done in educating consumers about credit card use and costs.
As well, providers should give more feedback to customers who are struggling with repayments about the suitability of their cards and alternatives.
