Aussies need not be trapped on interest rates being imposed by their existing banks, with the government and consumer groups urging bank clients not to hesitate on switching providers when the situation warrants it.

Consumer advocacy outfit Choice reminded the public that small lenders offer lower interest rates as against to the deals normally found on Australia's so called Big Four.

Jumping overboard is much easier now and more beneficial to consumers, Choice said.

With the Reserve Bank of Australia (RBA) issuing its decision on Tuesday to hold off any movement on the country's policy, the February cash rate is stuck at 4.25 per cent, further raising speculations that banks will implement higher rates than that 'suggested' by the central bank.

Citing growth and inflations levels that were manageable, the RBA is convinced that pausing for the month is best move for now though it allowed that the months ahead will mostly alter the route being pursued by the RBA board.

The biggest concern, however, is that banks especially the majors, may opt to push up their rates beyond the 4.25 per cent RBA guidance, which analysts said is likely as banks would want to profits.

Such attitude has become more prominent in light of the increasing financing costs, which the banking industry blamed on the financial crisis that the euro region is battling at this time.

Local borrowers, however, should not be paralysed by the spectre of higher rates, according to federal Treasurer Wayne Swan, as he noted that they can actually shop around to avail of the best loan packages that banks have been offering.

Like Choice,Mr Swan said that aside from ANZ, CBA, NAB and Westpac, other loan providers are playing the field and dangle flexible terms to consumers.

"You can get far better deals than that elsewhere in the financial system right now," Mr Swan was reported by the Australian Associated Press (AAP) as saying on Wednesday.

He acknowledged though that the latest RBA move was greeted with disappointment by many Australians but pointed out at the same time that the country's central bank must also ensure that the local economy remains on solid ground amidst the worsening situation in many parts of the world.

While regulating the industry may prove attractive for many quarters, Mr Swan added that the government is not in the business of throwing its weight around to force banks, big or small, to follow RBA's policy rates.

"We don't regulate interest rates in this country ... and we haven't done so for a very long period of time," Mr Swan told The Australian.

On his part, opposition treasury spokesman Joe Hockey urged the public to also consider the other side of the prevailing situation, in which banks were indeed profitable because of Australia's robust banking environment.

"The more profitable they are, the higher their credit rating and the cheaper they can borrow money ... and the better credit rating, the cheaper the money and the cheaper it is for us," Mr Hockey was quoted by ABC as saying.

He added that banks, especially the giants, would think hard before they opt for rates that are independent from that of RBA's, insisting that such decision would negatively impact on their reputation.

And for once Mr Swan agreed with his Liberal counterpart, explaining that "any bank contemplating this move runs the risk of backlash from their customers."

"The reforms we've put in place make it easier for families to ditch their bank if it doesn't do the right thing by them," Mr Swan told The Herald Sun.