Consumers with a credit card from one of the ‘big four’ banks could save hundreds of dollars per year and reduce their interest rate by up to 10 per cent by switching to a smaller lender, new research suggests.

Consumer advocacy group Choice has uncovered a large disparity between the interest rates of the big banks and their low-profile competitors in their list of Australia’s top 20 credit cards.

Not one of the credit card products offered by ANZ, Commonwealth Bank, NAB, or Westpac rated a mention in Choice’s list.

Despite record-low official interest rates, some are still charging up to 20 per cent interest on their credit card products.

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Choice Head of Media Tom Godfrey says major banks use traps to lure consumers by focusing on rewards schemes, interest-free periods, balance transfers and slogans like ‘low’ annual fees.

“While the major banks try to convince you their ‘low rate’ cards are worth considering, with an interest rate of 14 per cent they are still a long way from the best deals on offer,” Mr Godfrey said.

The analysis found the best rate on offer is 8.99 per cent through Community First McGrath Pink Visa and Low Rate Visa.

Victoria Teachers Mutual Bank Visa Platinum; Maritime, Mining and Power Credit Union Visa; and Bank Mecu were next best at 9.99 per cent, 10.12 per cent, and 10.14 per cent respectively.

To put the importance of the difference in interest rate in context, someone with a $2000 debt, who pays off $50 per month off their 19.75 per cent interest rate credit card, would take five years and six months to clear the debt and incur $1289 worth of interest in the process.

For a credit card with an interest rate of 8.99 per cent it would only take four years to pay off the same amount. They would be charged $386 worth of interest over this time.

“If you have a credit card with a big bank you are paying far too much interest and it’s time to shake off the lazy tax and move your money,” Mr Godfrey said.

Earlier this year, Choice’s consumer pulse survey found 19 per cent of Australians were relying on credit cards to get through to pay day.

“With 30 per cent of us carrying a balance on our credit cards and most of us still banking with the big banks, there are also big savings to be made by switching to a credit card offered by a smaller financial institution, Mr Godfrey said.

The top 20 low-interest credit cards on the market

1. Community First – McGrath Pink Visa – 8.99% 

Annual fee – $40

Late payment fee – $25

Pros – Purchases up to 55 days interest free

2. Victoria Teachers Mutual Bank – Visa Platinum Credit Card – 9.99%

Annual fee – $84

Late payment fee – $20

Pros – Overseas travel insurance at no extra cost

3. Maritime, Mining & Power Credit Union – Visa Credit Card – 10.12%

Annual Fee – $60

Late payment fee – $0

Pros – Purchases up to 55 days interest free

4. bankmecu – Low Rate Visa – 10.14%

Annual fee – $59

Late payment fee – $0

Pros – A promise to never market to card holders encouraging them to increase their credit limit or level of spending

5. SCU – Low Rate Visa – 10.49%

Annual fee – $49

Late payment fee – $25

Pros – Purchases up to 55 days interest free

6. Credit Union SA – Visa – 10.49%

Annual fee – $10

Late payment fee – $10

Pros – No card fee in the first year and credit card limit ranging from $1000-$20,000

7. Beyond Bank – Low Rate – 10.49% 

Annual fee – $30

Late payment fee – $25

Pros – Up to 62 days interest free on retail purchases

8. Police Bank – Visa Credit Card – 10.96%

Annual fee – $30

Late payment fee – $10

Pros – Annual fee waived for the first year 

9. ADCU – Low Rate Visa Card – 10.99%

Annual fee – $49

Late payment fee – $25

Pros – No fee for additional card holders 

10. Virgin Money – Low Rate Card – 10.99%

Annual fee – $99

Late payment fee – $10

Pros – 0% interest on balance transfers for the first six months

11. P&N Bank – Easypay Visa – 11.49% 

Annual fee – $40

Late payment fee – $10

Pros – Up to 45 days interest free on purchases 

12. P&N Bank – Platinum Visa – 11.49%

Annual fee – $80

Late payment fee – $10

Pros – $0 annual fee if you apply for a card before December 31, 2014

13. Teachers Mutual Bank – Teachers Credit Card – 11.50%

Annual fee – $0

Late payment fee – $10

Pros – Special introductory rate of 7.9% for the first six months before reverting to 11.5%

14. Defence Bank – True Blue – 11.74%

Annual fee – $45

Late payment fee – $20

Pros – 3.99% introductory rate for the first six months before reverting to 11.74%

15. BCU – Classic – 11.8% 

Annual fee – $40

Late payment fee – $0

Pros – Get a cash advance at the same rate

16. Heritage Bank – Gold Low Rate – 11.8%

Annual fee – $0

Late payment fee – $20

Pros – No annual fees and credit limits from $1000-$75,000

17. BankVic – Visa Silver – 11.95%

Annual fee – $0

Late payment fee – $9

Pros – Introductory fixed rate of 6.99% for the first six months

18. Greater BS – Greater Visa – 11.95%

Annual fee – $40

Late payment fee – $20

Pros – No annual fee if you spend a minimum of $10,000 

19. American Express – Low Rate – 11.99% 

Annual fee – $65

Late payment fee – $30

Pros – Add up to four supplementary cards with no annual fee

20. Newcastle Perm – Value Plus – 11.99%

Annual fee – $49

Late payment fee – $25

Pros – Interest rate free period on purchases of 55 days