In UK on an average a quarter of Britons have as little as £1 in their bank account by pay day, according to a new research reveals.
Eventually half of us have been stung by hefty bank charges – sometimes as high as £10 a day - after going overdrawn without permission in the last 12 months.
For some, this amounted to a staggering £750 in charges over the year.
The survey, which polled 800 Britons who earn the average UK salary of £23,000 or below, also found 50 per cent had no savings.
In August, a Government report revealed banks make £1.2 billion a year from hitting around 16 million customers with unarranged overdraft charges.
The average unauthorised overdraft fee - when the bank has not agreed to a customer going overdrawn - is £57.50 a month, according to research by the website Moneyfacts.
At that average fee, if someone were to go overdrawn every month they could end up paying £690 a year – with daily interest charged on top.
And worryingly, more than a quarter of people fall into overdraft territory just 17 days after payday. These customers, often younger people, can fall into a spiral of debt which then incurs more fees, with potentially serious consequences.
The new research was commissioned by U Account – a new current account where customers can never go overdrawn.
As a result, they avoid extortionate overdraft charges that plunge them into further into debt and avoid charges if a direct debit bounces due to lack of funds.
Alex Letts, founder of U, said: 'The dirtiest secret in the UK banking sector is with the way people are charged.
'Banks can only provide a free service for the minority of wealthier customers because of the fees and penalty charges paid by millions of normal households battling with incredibly tight budgets. Those costs are mainly for unplanned and exceeded overdrafts.
'We are disrupting that old banking order by saying 'relying on people's misfortune, debt or mistakes is no longer good enough'.
Like a traditional high street bank, the U Account lets customers pay in, make payments with a contactless MasterCard debit card, pay their bills through direct debits or standing order and make same day payments.
But unlike these banks, which make money by charging hefty fees for unauthorised overdrafts, U customers pay a nominal fee —never more than £10 a month — for the services they use.
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