Banks and other lenders are being urged to do more to help consumers in a debt trap thanks to mounting credit card bills.
The financial watchdog ASIC says it expects card providers to identify people in difficulty after finding 18.5 per cent of cardholders were behind in repayments, could make only the minimum repayments or had persistent debt.
It's also proposing new rules to make card providers assess whether a consumer can repay the credit card limit within three years before giving them a card.
ASIC's Credit Card Lending in Australia report, released on Wednesday, found credit card holders owed $45 billion as at June 2017 and were charged $1.5 billion in fees.
People with multiple credit cards were the most likely people to have problems.
And while some people transfer their debt from one credit card to another with a cheaper interest rate, they often end up increasing their debt by 10 per cent.
ASIC said many providers lured customers to cards with higher rates offering additional "lifestyle benefits" such as reward programs and longer interest-free periods.
The watchdog estimated they could have saved $621.5 million in interest payments if they had switched to a card with a cheaper rate.
But it found only two out of 12 credit card providers were proactive in helping customers struggling with debt.
"Two credit providers have begun pilot programs to proactively identify and engage with consumers that meet their own indicators of potential harm, low repayment behaviour or unsuited products," the report says.
"Credit providers should implement these types of initiatives, with indicators of potential harm or problems framed to capture an appropriate pool of consumers."
ASIC Deputy Chair Peter Kell said the watchdog expected card providers to act swiftly.
"We will be following up to ensure the problems we have identified are addressed, including public updates later this year," he said.
Tony Devlin, who heads the Salvation Army's Moneycare service for people with financial problems, supported ASIC's call for card providers to do more to help those who were struggling.
"It's still too easy to get a credit card and to increase the limit," he told AAP.
"The banks are quite happy for you to max out your card and pay the minimum repayment because they make a lot of money out of it.
"But if you are paying the minimum repayment you are potentially in hardship and they are the people the banks should be reaching out to and seeing if they can assist them rather than offering them more credit."
Meanwhile, ASIC has named and shamed Citi, Latitude, American Express and Macquarie for retaining old rules for grandfathered credit cards issued before June 2012.
At the time, ASIC introduced rules requiring lenders to ensure customers did not have to pay more interest than they need to.
ASIC's report says while the four lenders are not breaking the law, they are charging longstanding customers more interest than they should.
© AAP 2018