NatWest and RBS are the latest banks to change their overdraft fees, which will now cost 39.49% APR for arranged and unarranged lending.
These rates were originally going to be introduced in April, but were postponed due to the coronavirus pandemic. Several banks have already upped their overdraft rates, including Barclays, Halifax and Santander.
The Financial Conduct Authority (FCA) has told providers they must offer an interest-free overdraft buffer of £500 to customers who are experiencing financial difficulties as a result of COVID-19 until 31 October 2020, with more than 27m interest-free overdrafts being granted so far.
Here, Which? explains how the overdraft charges could affect you and share advice on how to get out of your overdraft.
Almost all of the major banks have now announced and implemented their new overdraft fees. Some have a flat rate, while others base it on the kind of account you have or your credit history.
First Direct and HSBC are maintaining their coronavirus overdraft support measures until 29 August 2020; the new standard rates of overdraft pricing will then kick in from 30 August.
Metro Bank is waiving overdraft interest on its personal current account until 9 October; the interest rates below will be charged from 10 October onwards.
In addition to the measures outlined by the FCA, the Co-operative Bank has introduced a £200 overdraft for customers who have become unemployed, as well as launching a new digital overdraft request process to make it easier to set up.
The table below shows confirmed bank overdraft changes.
This came after an investigation found the overdraft market was leaving vulnerable customers facing confusing charges and high fees for using unarranged overdrafts.
The new rules mean fixed daily and monthly overdraft fees are banned, and ensure customers see the same costs for using unarranged and arranged overdrafts.
While most banks have pitted their flat overdraft rates at around 40%, the FCA says seven out of 10 borrowers will either be better off or see no change to their costs.
Those who may lose out include people who use arranged overdrafts for long periods: personal finance website Money Saving Expert says a borrower with a £2,000 arranged overdraft could see their annual fees rise from £180 to £680.
The new overdraft changes mean that, for some people, overdrafts will become one of the most expensive forms of debt and should be paid off as a priority. There are several ways of doing this, but here are a few to consider:
If you have savings, using them to pay off your overdraft is the easiest way to sort out your balance without incurring any other debt. What's more, the interest you'll be receiving on your savings will almost certainly be lower than what you're charged as credit interest.
However, if clearing your overdraft will mean using up all of your savings, look at your overall financial situation and, if you can, make sure you maintain an in case any unforeseen expenses crop up.
A 0% money transfer card allows you to transfer cash directly to your bank account and clear your overdraft and offers a set period during which you won't have to pay interest.
Currently, the longest interest-free period is 18 months - but after that you'll start being charged interest and the rates on these kinds of cards can be expensive.
Personal loans can be one of the cheapest ways to pay off large overdrafts, but often the biggest banks won't offer the best rates on smaller loans.
Personal loans have the advantage of clearing an overdraft in one go and you can also set up monthly payments to help with budgeting.
If you're worried about your debt, it may be worth talking to a professional who can help assess your options.
Your bank or building society will be able to advise you on the overdraft changes and how you may be affected by them depending on how you use your overdraft.
Once you've successfully paid off your overdraft debt, try and make a plan that will stop you having to use it again.
Things such as setting a budget for each month, cutting down on unnecessary spending and making switches - be it with energy providers, mobile phone bills or gym subscriptions - will all help reduce your outgoings.