Millions of customers held to a £72 ransom by NatWest simply for going more than £10 into arranged overdraft

If you find yourself teetering between black and red at the end every month – and get slapped with hefty overdraft fees – it may be worth looking around for an account with a better deal.

These are three of the best options currently available:

• First Direct’s First Account offers £250 fee-free. After that, unarranged overdrafts are charged at 15.9 per cent up to the £500 overdraft maximum.

However, you must pay in at least £1,000 per month to be eligible for this account. First Direct also has no branches, so if you prefer face-to-face banking it is probably not for you – although the bank’s customer satisfaction reports are excellent.

As a bonus, you get £125 cashback when you switch. If you wish to switch to another bank within 12 months, it will give you an additional £100 to move.         

• If you need temporary relief from overdraft fees,Santander Everyday Current Account is offering a 0 per cent charge for the first four months.

After that, agreed overdrafts cost £1 a day, capped at £20 a month. Unarranged fees are charged daily at £5 – capped at 20 occasions per month and potentially racking up to £100. The overall overdraft fee cap is a monthly £150.

There is no minimum account balance and Santander offers a free switching service.

Watch out – Santander has received a lot of bad press for its poor customer services standards, although there seems to have been improvements in recent months.

• Although interest on The Co-operative Bank Current Account Plus overdraft is charged at a whopping 18.9 per cent,there is a £200 fee-free buffer, just in case you find yourself slipping into the red.

Informal overdrafts incur a monthly £20 charge – as well as a daily £20 service charge. However, there is a quarterly cap of £150. In addition there is formal overdraft service of £20 a year.

You must pay in a minimum of £800 per month to the account.

The other option is to avoid overdraft charges altogether.

If you are running up hundreds of pounds in overdraft fees every month, the best option may be to go cold turkey and sign up to a bank account that simply does not allow you to get overdrawn in the first place.

Barclays Cash Card Account is a basic account that offers free, no-frills banking.
You can make payments by direct debit or standing order and can withdraw up to £300 a day. However, there is no overdraft facility and no cheque book.

Another low-cost, no fuss option is Co-operative Bank’s Cashminder Account.
Once again there is no overdraft or cheque book, but it does come with a debit card and standing order and direct debit facilities. The minimum balance required is £1.

By Amy Andrew