Banks have increased the interest rates paid by hundreds of thousands of shoppers this year, even though the cost of borrowing set by the Reserve Bank has fallen almost a quarter.
Banking commentators say credit card interest rates have been slow to fall in response to drops in the official cash rate.
The result is that for many Christmas shoppers, the unpaid balances on their cards will cost them more than last year.
Three of the big banks - BNZ, ANZ-National and Westpac - raised credit card interest rates by 1 per cent or more this year, citing the high cost of borrowing.
Since those rises, the Reserve Bank has lowered its official cash rate from 8.25 per cent in June to 6.5.
That has led to lower mortgage rates but not credit card interest rates.
Banks the Herald spoke to said the Reserve Bank interest rate was only one part of credit card costs. Credit card debt was much riskier than mortgage lending because it was unsecured, and the interest rates charged reflected the extra risk - which could increase in tough economic times.
As well, much of the money New Zealand banks used to finance credit card debt came from overseas banks, which were lifting interest rates because of the credit crunch.
The director of the Centre for Banking Studies at Massey University, David Tripe, said credit cards cost more to administer than home loans because they were made up of a large number of small amounts.
But he said it "wouldn't be unreasonable" to conclude that banks had been slow to drop their rates.
Andrew Campbell, campaign director of the bank workers' union Finsec, said banks had not done enough to explain why credit card rates remained above 20 per cent.#He said increasing numbers of people relied on credit cards to pay basic household expenses. Many, particularly lower income earners, were struggling to repay the money.
A survey by credit reporting agency Dun and Bradstreet last month found one in four New Zealanders expected to use their credit cards to cover purchases they otherwise couldn't afford before the end of summer.
A Westpac spokesman said the bank's annual report showed a rise in overdue credit card payments. Credit card fraud, high overseas borrowing costs and the risk of default all added to the cost of providing the service.
The BNZ's general manager of strategy and marketing, Blair Vernon, said a drop in the 90-day bank bill rate would eventually flow through to credit card rates. But in the short term, banks' costs would stay high.
Dr Tripe said there was little incentive for banks to move quickly on interest rates because about half the roughly two million New Zealanders with credit cards aimed to pay the balance at the end of each month and so did not care about the rate.
People who could not pay their balances were often higher-risk borrowers who would find it difficult to switch banks to get a cheaper rate.
Mr Campbell said banks should rethink sales targets that required their staff to push credit cards, because if banks had tighter lending criteria they would not need to price so much risk into interest rates.
But banks said the card market was competitive and rates were constantly reviewed.