The quarterly Moneyfacts UK Credit Card Trends Treasury Report, which studies the UK personal finance market, found that the average overdraft fee has fallen by just £1.43 since the beginning of the year.

In January 2017, the average unarranged overdraft fee (based on one penalty for a whole month) was £53.61, and today it stands at £52.18. At the same time, the interest rate charged for unarranged borrowings fell dramatically from 12.80% in January 2017 to 10.66% EAR today. This change is largely down to providers pulling interest charged accounts in favour of flat fees, which are usually more expensive for account holders.

Rachel Springall, finance expert at Moneyfacts, said: “While the review into the current account market was expected to bring a change in how banks design their charging structures for customers who fall into an unarranged limit, our statistics show there has been very little change across the market and that there is still room for improvement.”

She said that while flat usage fees may seem a simple way to show how much a consumer will be charged if they go over their arranged limit, this transparency comes at the expense of a more expensive charging structure. She added: “As an example, someone who borrowed £300 for 15 days at a rate of 10.66% EAR would pay just £1.31, but the same borrowing with a flat fee of £5 per day without any cap, that’s an eye watering £75.

“Thankfully, there are some main brands that have taken the opportunity to reduce the unarranged overdraft fee, including NatWest and Royal Bank of Scotland. In addition, some banks reduced the overall cap in the fees charged. In November, Lloyds Banking Group scheduled in a change in the way they will charge customers for borrowing for arranged overdrafts and they will also abolish fees on unarranged overdrafts, but it may not be the cheapest choice for customers who frequently dip into their arranged limit.”