Charges for going into the red increase 20%

Bank customers who exceed their overdraft can expect an extra £5 in charges for every transaction which pushes them into the red this Christmas.

Over the past year the charges for exceeding your agreed overdraft limit has increased by twenty per cent according to MoneyExpert.com. Analysis of the current account market discovered that banks have increased charges for exceeding an agreed overdraft, meaning that the majority of us can expect to pay an extra £5 every time we do so.

In November 2007 most accounts charged £25 for transactions which led balances into the red, such as the "bouncing" of cheques, but today this figure has increased to as much as £30 - this is despite an investigation and subsequent court case by the Office of Fair Trading into the legality and justification of these fees. These changes could potentially affect as many as one in four UK adults according to MoneyExpert's data.

These fee increases are part of a wider trend amongst the banks towards pushing up the cost of borrowing. MoneyExpert analysis of the current account market shows that the cost of authorised overdraft borrowing has also become more expensive. Last November the average current account charged 11.67 per cent but today this figure is 13.12 an increase of 1.44 per cent.

Sean Gardner, Director of MoneyExpert.com, said: "We're approaching the most expensive month of the year and for those people already in their overdrafts the advice is clear, keep a close tab on your outgoings. A £30 charge isn't the Christmas present most of us are after and if you want to avoid these costs then watch your balance.

"Across the board borrowing is increasingly expensive and those customers living in their overdraft need to be aware that in the majority of cases they'll pay a premium for this cash.

"In some ways these increased charges are surprising. You'd expect the high profile court battle with OFT to have made banks nervous about putting up charges while they're still under review."

The increased cost and charges for overdraft borrowing come at a time when MoneyExpert's latest missed bills index found that more than one in ten people (11 per cent) have missed a mortgage, credit card or personal loan payment in the past six months suggesting that these increases are coming at a time when household budgets are tight.