New Zealanders are paying about $10 million a month more in interest on their credit cards than they would be if banks had passed on falls in the Official Cash Rate (OCR).

While the OCR fell by 5.75 percentage points in 2008 and last year, credit card interest rates barely moved.

The average credit card rate was 20.3 per cent when the Reserve Bank began its latest round of OCR cuts in July 2008. That had fallen to 18.4 per cent by May last year but in the same period the OCR dropped from 8.25 per cent to 2.5 per cent.

The average credit card rate remains about 18.5 per cent and the OCR is currently 3 per cent.

That means Kiwi credit card holders pay about 3.5 percentage points more in interest a year than they would if banks had maintained the same margin between credit card rates and the OCR.

On the nation's latest personal outstanding credit card balance of $3.517billion, that is $119.5million a year or almost $10million a month.

Massey University banking expert David Tripe said credit card interest rates did not move much because the area was "notoriously price insensitive".

In general, those with outstanding credit card balances would have borrowed the money anyway and were not worried about the interest rate.

Anyone smart enough and with a decent credit rating would refinance the debt on to a housing or personal loan at a cheaper interest rate, but those in real trouble would not be able to do so. "That means the average credit quality of the credit card borrower is perhaps lower than it might be otherwise, so it may be higher risk.

"So there is therefore no particular incentive for the banks to be nice to them and reduce their interest rate, because they're a relatively high-risk and desperate borrower."

Apart from during the 1980s, when interest rates generally were very high, credit card rates had remained at about the same level for years, Tripe said.

Bernard Hickey, of, said unlike other types of lending, credit card rates related more to the risk of default than to the cost of funding the loan. Since the financial crisis, "the banks would argue that the risk involved in credit card lending actually increases and therefore they have to compensate for that by keeping the margin up high".

Credit cards were "a mug's debt", he said. "The difference between 17 per cent and 20 per cent is just irrelevant, really, because credit card debt will get you in the end. Any sort of debt where you're paying more than about 10 per cent is unsustainable. The real message here is: 'Don't buy things you can't afford'."

Catherine McGrath, chief executive of customers, markets and products for ASB, said only about half its credit card customers paid interest. Customers received other benefits such as rewards schemes and free travel insurance.