The Labour Party is profiting from a credit card that charges interest at more than nine times the Bank of England base rate and nearly three times that of the most competitive card on the market.

The party is urging supporters to take out its own credit card, on which they pay a standard rate of 18.9 per cent, and a higher 23.9 per cent for cash transactions.

Although ministers and Labour MPs have urged banks to pass on interest-rate cuts to customers, the party had failed to follow suit with its own credit card.

Despite recent dramatic cuts in interest rates, leaving the Bank of England base rate at 2 per cent, the lowest in 57 years, the Labour Party credit card's rate has remained at 18.9 per cent. Five years ago it was set at 17.9 per cent.

Its members could pay 6.8 per cent with Barclaycard. Even the Co-operative Bank, Labour's card issuer, has a much cheaper card of its own, pegged at an APR of 9.9 per cent.

Labour's card also, in effect, charges its poor members more because middle-income applicants qualify for a premium card with a discounted interest rate.

Only a fortnight ago, Lord Mandelson, the Business Secretary, and Gareth Thomas, the Consumer Affairs Minister, told companies at a credit card industry summit that they would take action if lenders were acting unfairly.

Lord Mandelson said that he would have no hesitation in referring the industry to the Office of Fair Trading should the companies not “step into line and start treating people in a fair, responsible, consistent way”.

Gordon Brown also told the House of Commons: “We have got to have proper measures to regulate the industry where people are charging exorbitant rates and we will take whatever action is necessary.”

Credit card companies will respond to the Government's ultimatum at a meeting on Thursday. Ministers want them to pass on interest-rate cuts to their customers.

Consumer groups and debt specialists condemned Labour for failing to “practice what they preach”. Sean Gardner, director of MoneyExpert.com, said: “The Government has been calling on lenders to pass on rate cuts and to make life easier for consumers while all the time encouraging its own party members to sign up to an expensive and uncompetitive credit card.”

A glossy advertisement sent to Labour Party supporters, encourages them to “Help Build Our Campaign Funds with a Labour Credit Card”. According to the leaflet, the card has already raised “well over £1 million for Labour!”. Each time someone opens an account, the Co-operative Bank gives Labour £15. Further amounts are payable when the card is used.

The Co-op finances cards for the Liberal Democrats on the same terms. So far, 15,000 people have signed up for a Labour Party Card and 3,500 for the Lib Dems.

The Conservative Party offers a card run by MBNA. The rate is 15.9 per cent but soars to 27.9 per cent for cash transactions. Although the card is no longer promoted actively, it is open to new applicants.

Malcolm Hurlston, chairman of the Consumer Credit Counselling Service, said: “It would be nice if the political parties were putting their wallets where their mouths are, but that is a bit unlikely.”

More than 30 million people in Britain have a credit card and collectively they owe £55 billion. It would take 19 years for someone with a typical card who owed £1,000 to repay the loan if they paid back only the monthly minimum amount.

The Labour Party said: “Neither the Labour Party nor the Co-operative Bank promote irresponsible borrowing, in full awareness that individual circumstances differ, and that credit cards when used responsibly are a legitimate tool of financial management.”

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