A report from price comparison site uSwitch.com found that the big banks were charging over 50 times more than the cheapest in fees and interest on typical overdrafts.

The research also found that 21% of customers did not know what an overdraft costs them, while 59% didn’t realise they could switch current account provider while being overdrawn.

On average, uSwitch found that consumers were paying £56.52 every year to their high street bank in overdraft fees and interest rates.

By comparison, customers of the cheapest provider First Direct – which charges no interest on overdrafts up to £250 and no fees – were paying just £1.56 a year on the average overdraft.

Source: uSwitch.com correct as of 15^th October 2018

Tashema Jackson, money expert at uSwitch.com, said the associated charges of overdrafts seemed to be accepted as a necessary cost when they did not need to be.

“Banks that offer incentives on positive balances often make the headlines, but for the 12 million of us who rely on our overdraft to make ends meet every month, getting the cheapest deal on borrowing is what will really save you the most money.

“If you know you are going to be a few hundred pounds overdrawn each month, it really pays to do your research.

“Some banks offer interest free overdrafts, while others charge no fees for using one.

“Even when you have to pay, some will cost you significantly less than others.”

Tashema felt that banks could and should be doing more to help their customers ensure they were getting the best deal possible.

“Far too many aren’t aware what their overdrafts are actually costing them or that they can [switch] to a cheaper provider while overdrawn.

“Knowing what the penalties are should you miss a repayment and understanding the impact on your credit rating are essential before taking out any form of borrowing.”