Pressure is growing on other banks to follow the lead of the NatWest and RBS, which have announced they are to reduce the charges for customers who go overdrawn on their current accounts without agreement or exceed an agreed overdraft limit.
With effect from 1st October, the cuts will see the fee for returning a cheque, direct debit or standing order cut to £5. In addition, the charge for paying an item when overdrawn will be reduced by half to £15 per day.
The move comes as the new Supreme Court prepares to reveal whether or not the Office of Fair Trading should be allowed to regulate such charges.
"This is good news for customers, not least because the fees for unarranged borrowing have been an area of ongoing concern for them," said the new CEO of the UK Retail Bank, Brian Hartzer. "As we look ahead there are many issues to consider, but we thought it was time to move this particular customer concern forward by cutting our charges.
"As it relates to past charges, we are awaiting the outcome of the industry-wide bank charges test case. Our aim, which has remained unchanged throughout the case, has been to gain legal clarity around this issue and we remain fully committed to it through the legal process."
The Chief Executive of the consumer watchdog Which?, Peter Vicary-Smith, said the announcement was a step in the right direction and a victory for consumer pressure.
"However, if RBS and NatWest truly want to get back in their customers' good books, they should admit defeat in the bank charges test case and repay the millions of pounds Which? believes they've been unfairly taking from their current account holders for years," he added.
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