Money MoT: Halifax fee-free overdrafts Neither the Ultimate Reward nor the normal current account pays any credit interest, although Halifax's Reward account will pay £5 a month into your account - which is more generous than most current accounts. To get the £100 payment and free overdraft you can't just run this new bank account alongside your main current account. Instead customers need to switch at least two direct debits to the new account; this is likely to mean switching your salary too, to ensure that the payments are covered in full each month. This account may be attractive in the short term, but is unlikely to offer value for money over the longer term if you regularly need to use an overdraft. Once the 12-month period is over, customers are likely to find that they are paying higher overdraft charges than at rival banks. Paul Lawler of Moneysupermarket.com said Halifax had one of the most expensive overdrafts on the market, so customers needed to make sure it remained suitable for their requirements after the first year; if not, they should switch again. Like a number of other banks Halifax doesn't charge interest on overdrafts but instead imposes a fee for each day you are in the red. It charges a £1 daily fee for overdrafts of less than £2,000; this rises to a £2 daily for overdrafts between £2,000 and £3,000 and £3 for larger overdrafts. If you exceed your agreed overdraft limit you will be hit with a £5 daily fee. These higher charges can easily outweigh the benefit of having £5 paid into your account each month, or even the £100 sweetener. In contrast, Santander charges just a £1 daily fee (for a maximum of 20 days a month) on its bank account. First Direct offers a permanent £250 interest-free overdraft and then charges a rate of 15.9pc on authorised overdrafts over this limit. Mr Lawler said: "If you had a £1,000 overdraft over the course of a month you would be charged £9.80 with First Direct, £20 with Santander but £30 with the Halifax." The Reward account is useful for those who never dip into the red, but those who do use their overdraft should tread carefully with this "fee-free" offer.