Wary bank customers subsidise the profligate

Careful customers who arrange for an overdraft with their bank before they dip into the red are being penalised for the profligacy of imprudent borrowers, research indicates.

Nearly two thirds of current accounts now impose a “usage fee” on customers who use a pre-arranged overdraft, compared with just a fifth in 2008.

While this has pushed the monthly average charge from £2 to £12 – a record high – those who fail to alert their bank before their cash flow dries up are being charged less, according to data firm Moneyfacts. This is because banks have come under pressure to reduce fees that were locking some people in a “debt cycle”.