Banking group RBSicon-NatWest - majority owned by the taxpayer - has broken ranks with the rest of the industry and decided to slash its overdraft charges. The move comes ahead of a decision of the new Supreme Court on whether or not the Office of Fair Trading (OFT) can regulate these charges.
From 1 October, RBS and NatWest customers will be charged only 5 for having a cheque bounced, down from 38.
The fee for paying an item on an overdrawn account falls in half to 15.
"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 chief executive of the bank's UK operations, 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 ," he added.