Five of the worst overdraft tricks deployed by banks Put it another way, if you only borrowed £500 for one day this charge is equivalent to an annual percentage rate (APR) of 73pc. If you borrowed £25 for one day this charge would be equivalent to an APR of 1,460pc - a figure that is more usually associated with the payday loan companies. Mr Hagger said: "Both Halifax and Santander charge a £1 daily overdraft fee, which will only start to be competitive if you have an overdraft of more than £1,840." Interestingly, Halifax then bumps up this charge to £2 a day, once your overdraft exceeds £2,000. But the fact that banks like RBS and Lloyds now charge a monthly usuage fee (of £6) on top of the interest charge will mean that this is less competitive, particularly for those who only dip into the red for one or days a month. The vanishing buffer Most bank accounts have a "buffer" that stops the customer being charged interest or fees when they go slightly overdrawn. But check at what level this is set. RBS previously offered a £100 buffer, which would protect a lot of people from inadvertently slipping into the red because a cheque hasn't cleared or a payment has been overlooked. Now this is reduced to just £10 - which is becoming the industry standard. At such a slim margin this offers very little protection against overdraft fees. Ms Waycot said some providers still do offer decent buffers: First Direct has a £250 interest-free overdraft, while NatWest and RBS offer a £500 option, but only on their "Black" account, which is only available to those with an income of around £100,000 a year. The mirage of free banking Banks have been trying to persuade customers to switch to a fee-charging bank account for years. Many now offer an extensive range of premium bank accounts that offer "free" travel insurance and breakdown assistance, so long as you pay a monthly fee, which can be as much as £300 a year. Now it appears that banks are using more underhand tactics to get us to pay a regular fee for banking services. RBS now hcharge a monthly fee simply for the privilege of using an arranged overdraft service, a key facet of a bank account for most customers. Lloyds already has such a charge on its bank account. As stated above, this is on top of regular borrowing charges, which can be up to 20pc. This isn't the only way that fees are slowly being introduced: First Direct, for example, will charge £10 a month if customers don't deposit at least £1,000 into the account. The ever-increasing overdraft charge If you exceed your agreed overdraft limit, be prepared to be hit with a raft of far-higher charges. Bank of Scotland levies a £10 daily fee, (although this is charged for a maximum of eight days a month). These fees come on top of interest-rate charges on both the authorised and unauthorised borrowing, plus the additional fees charged for bouncing, or paying, a direct debit or cheque. Typically these are between £10 and £15 per payment. Surprisingly, it is the Co-operative Bank that has one of the most hair-raising charging structures. It charges a flat £20 fee for exceeding your overdraft limit, and then imposes a further £20 each day this unauthorised overdraft increases. If you have three or four payment scheduled to debit your account, this can be very costly indeed. On a stretched budget paying these additional charges can make it even harder to stay in the black the following month. The spectacle of gravity-defying interest rates It's an old trick, distract the audience with something showy so they fail to notice what is really going on. Banks such as Santander, Lloyds and Halifax offer gravity-defying interest rates on their current accounts: Santander for example pays 3pc on its 123 Account. However, if you dip into the red, even occasionally the charges you pay will dwarf the interest received. That said, if you never go overdrawn make the most of these offers. But remember most are very limited and will only pay these rates for one year, and then on very limited sums - usually up to just £2,500.