Bendigo Bank has cautioned that credit card interest rates are very different to mortgages as a new debate over the hit to people's hip pockets unfolds.
The Victorian government says credit card interest rates are excessive and remain out of step with other interest rates.
It wants the commonwealth to investigate reforms that would bring in a maximum margin between credit card interest rates and the Reserve Bank's cash rate.
The cash rate is currently at a record-low 0.1 per cent but a group of Labor Party and union leaders say some credit card users are being charged interest rates upwards of 20 per cent.
The Bendigo Bank has warned that credit cards are different to fixed-term, secured lending products like mortgages.
For a start, they are higher risk and include the cost of write-offs and payment defaults, the bank said.
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Credit card rates also include features and benefits like insurance and reward points.
"As funding costs represent a smaller portion of our cost base, there is less direct correlation with the RBA cash rate," the bank said in a statement.
However, the bank said its cards were "highly competitive" against other market players and that it listened closely to customers so it could balance their needs with its.
"In recent years, the Bank has proactively moved more than half of its credit card accounts to a lower purchase rate product as a part of our new product suite designed to better suit our customer base," it said.
"Bendigo Bank also has several initiatives in place to ensure responsible provision of credit such as requiring new customers to select their preferred credit limit, rather than receive the maximum limit which the bank will assign."
The Victorian government says only one credit card interest rate restriction is enshrined in legislation.
It allows a maximum credit interest rate of 48 per cent, which the state government has branded "woefully inadequate" for the current interest rate environment.
The Finance Sector Union's Nicole McPherson said the credit card market is "open slather".
"Finance Sector Union members are experiencing an increased focus by banks on selling these high-margin products," she said.
"This can lead to a tragic cycle of spiralling debt for the customer, and stress and pressure on Finance Sector Union members to sell."
Meanwhile, the federal Labor party has written to treasurer Josh Frydenberg and the heads of Australia's large banks - including the Bendigo Bank's - seeking an urgent review of options.
The federal government has been approached for comment.