James Daley

By James Daley

Most of the banks have been tinkering with their overdraft charges over the past few months, and this week it was the turn of Santander. By and large, Santander's changes will be good news for their customers. Although you'll get charged £6 a day for using an unarranged overdraft, as opposed to £5 a day before, a number of fees have been removed, and Santander has retained its £90 a month cap on total overdraft charges.

A few years ago, the Office of Fair Trading came up with six different scenarios to illustrate how people use their overdrafts. You can find these on all bank websites now, with a list of prices for each situation. Sceanrio one is a simple bounced payment when your account has run out of money. And the scenarios then increase in severity up to a situation where you end up in an unarranged overdraft for 21 days, and make 12 further payments from the account while you're in the red.

Most of the big banks now look quite similar across these scenarios - charging nothing or up to £10 for sceanrio one, and around a maximum of £90 for sceanrio six. Santander is a little expensive on some of the mid-range sceanrios, but its fee changes in August bring it in line with competitors like Lloyds, Natwest and Barclays.

The pressure now is on HSBC, which looks like something of an outlier with its £150 charge for scenario six. It may not be a patch on Clydesdale Bank and Yorkshire Bank, who charge a whopping £225 for sceanrio six, but out of the big five, it's the one that has most work to do.

Apples and pears

The OFT scenarios were a good idea - and they're a useful rule of thumb to see how expensive one bank compares to another. Sadly, many of the banks bury them in their websites - and there's no easy way to compare them without putting in the time and effort to visit each bank.

And of course, the six scenarios represent only a handful of possibilities, so to find out which bank is actually right for you, you need to be able to enter your own scenario. The good news is, the Money Advice Service has created a great comparison tool, which allows you to do just that.

And once you've found a few banks that look good in terms of price, don't forget to check Fairer Finance's bank account tables to ensure you're signing up with a bank that treats its customers well.