Federal Labor and crossbench senators have ganged up to hold an inquiry into credit card interest rates, now at an historic high above the Reserve Bank’s official cash rate.

Opposition Leader Bill Shorten and Labor senator Sam Dastyari have written to Prime Minister Tony Abbott seeking his support for the Senate inquiry.

“There is indisputable evidence that families and small businesses are being dudded,” they said in a statement on Sunday.

While the Reserve Bank has slashed its cash rate by 275 basis points since 2011 to an all-time low of two per cent, the average standard credit rate remains relatively unchanged at 19.75 per cent.

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A spokesperson for Treasurer Joe Hockey said the government will look at Mr Shorten’s proposal as it prepares to respond to its financial system inquiry, which included credit card-related matters.

Treasury is also co-ordinating a review with other members of the Council of Regulators into the issue.

“We will continue to work in a methodical way to improve consumer outcomes for Australian credit card holders,” the spokesperson told AAP.

An inquiry into credit card rates isn’t needed, Assistant Treasurer Josh Frydenberg says.

But Assistant Treasurer Josh Frydenberg was dismissive of the proposal and took the opportunity to attack the Labor senator advocating for the inquiry,

Mr Frydenberg’s told ABC radio Senator Dastyari is a “self-confessed showman of Australian politics” who’s looking for something to do after his “explosive acting career went up in flames in episode two of the Killing Season”.

He said the government was already doing enough to tackle high credit card interest rates with its Treasury review.

Independent senator Nick Xenophon says for far too long credit cards have been a lazy way for banks to bolster their profits, describing it as the “great credit card gouge”.

“Millions of Australians are paying billions of dollars needlessly with their cards,” he said in a statement.

The inquiry would be chaired by Senator Dastyari and hear from banks, affected consumers and consumer groups that have been pushing for change.

Senator Xenophon hopes it will provide the opportunity to canvass new law options that include greater transparency and whether there should be a ceiling on the difference between the cash rate and credit card rates.

He also wants banks to fund financial counselling for those caught up in the credit card trap and to offer alternative options to those seeking credit, such as lower interest personal loans.

The South Australian senator intends to release draft legislation by the end of the year.

– AAP