One in six consumers is struggling under a mountain of credit card debt that might never be repaid, according to alarming research by the corporate regulator.

Key points: New report by ASIC shows that Australians owe $45 billion in credit card debt

New report by ASIC shows that Australians owe $45 billion in credit card debt More than one in six Australians — around 1.9 million people — are struggling to repay their debt

More than one in six Australians — around 1.9 million people — are struggling to repay their debt Despite new regulations in 2012, not all credit providers are proactive in countering persistent debt

The Australian Securities and Investments Commission (ASIC) report showed 18.5 per cent of consumers were overwhelmed by their credit card debt load with outstanding balances now totalling $45 billion.

The study said banks and credit card companies were in the midst of a revenue bonanza with interest being reaped on $31.7 billion of that $45 billion debt figure.

ASIC warned that enticing credit card offers — notably balance transfers from one card to another — were "a debt trap", with 550,000 people in arrears and 930,000 with persistent debt as of June 2017.

A review of 21.4 million credit card accounts opened in the five years to June last year estimated consumers could have saved $621 million in a single year if they had switched to a more appropriate credit card with fewer frills and a lower interest rate.

The revelations came as financial institutions face daily heat from the banking royal commission, which has uncovered persistent unethical and, in some cases, unlawful behaviour.

To counter the growing debt mountain that is lucrative for banks but bad for customers, ASIC proposed tougher regulations to ensure consumers were only given credit limits that could be repaid within three years.

ASIC deputy chairman Peter Kell said despite rules introduced in 2012, not all credit providers had taken proactive steps to counter persistent revolving debt.

The alarming report shows 1.9 million Australians are struggling with credit card debt. ( Supplied: ASIC )

Mr Kell outed four lenders — Citi, Latitude, American Express and Macquarie — for retaining old rules for credit cards opened before June 2012, with 525,000 customers paying more interest than they needed to.

"There are a number of failures by lenders to act in the best interests of consumers," Mr Kell said.

"We expect them to respond swiftly to our findings and we will be following up to ensure the problems we have identified are addressed."

ASIC said while the four credit card providers identified were not breaking the law, they were over-charging longstanding customers and, "their conduct is out of step with the rest of the industry".

However, in response to a new Banking Code of Conduct, Citi and Macquarie would dump the grandfathered methodology from next year. American Express was also expected to update its policy and Latitude was reviewing its position.

The research also said credit card debt carried by young Australians was "of particular concern".

"Young people were more likely to be in delinquency and multiple cards were over-represented," the ASIC study warned.

The ASIC paper cited the findings of a Senate inquiry about the dangers of balance transfer cards, where consumers transfer some or all of their credit card balance and pay low or no interest over a promotional period.

"In the Senate inquiry's view, these transfers can be present a debt trap for consumers … if they fail to pay off the balance in the promotional period, keep the card the balance was transferred from … or make new purchases on one or more of the cards," the research said.

According to a report by ASIC, Australians owe $45 billion in credit card debt. ( Supplied: ASIC )

ASIC said more than 30 per cent of consumers increased their debt by 10 per cent or more after transferring a balance to a promotional "balance transfer" card.

It also said the profit motive by banks and credit card companies meant few had taken proactive steps to protect the interests of their customers, finding:

Nine of the 12 providers did not proactively contact consumers that make payments at or near the minimum amount to repay more of their outstanding balance

Nine of the 12 providers did not proactively contact consumers that make payments at or near the minimum amount to repay more of their outstanding balance Eight of the 12 providers did not look for signs of potential consumer harm other than training frontline staff to look for signs of financial difficulty

"Consumers who are in persistent debt, or repeatedly making low repayments, are profitable for credit providers," the research said.

"However, providers have obligations to conduct themselves efficiently, honestly and fairly."

ASIC has released a consultation paper to tighten rules on credit card lending to prevent consumers from being signed up to unsuitable credit card contracts.

The proposal — which is likely to be opposed by credit card providers — is scheduled to come into effect from January 1 next year.

Follow Peter Ryan on Twitter @peter_f_ryan