Santander unveils shake-up in current account charges

The group is launching a new current account which will have lower fees for people who go into unauthorised overdraft, but will replace interest charges for customers who have an authorised overdraft with a daily fee.

Under the new charging structure, customers who go into the red with permission will be charged 50p a day, up to a maximum of 5 a month, instead of being charged interest of 12.9 per cent or 19.9 per cent, depending on which account they have.

Those who go into unauthorised overdraft will have to pay 5 a day, with the fees capped at 50 a month.

They will also be charged 5 for every item that is paid while they are in the red without permission and 10 for every unpaid item.

The paid item fee is 86 per cent lower and the unpaid item fee is 71 per cent lower than charges on the group's standard current account.

The new account is available to anyone who holds their main current account with the group and pays at least 1,000 a month into it.

Santander will write to its existing current account customers alerting them to the new account, which will be available in December, following the rebranding of Alliance & Leicester.

It added that it was currently reviewing the overdraft charges for people who held a current account with it, but did not use it as their main account.

Nici Audhlam-Gardiner, director of banking at Santander UK, said: "The overdraft fee structure on the new account is simple to understand and transparent."

Earlier this month Lloyds TSB announced plans to restructure its overdraft charges so that customers who went into the red without permission would pay lower charges.

The group is reducing the monthly charge for an unauthorised overdraft from 15 to 5, but the new fee will also apply to people who go into the red with permission.

A number of groups have changed the structure of their unauthorised overdraft fees following a High Court test case on the issue.

The banks won the case, but the Office of Fair Trading is still working with them to make their charges fairer and easier to understand.