OVERDRAFT charges have caused many a headache for current account customers, whether it’s through busting your overdraft limit without realising it, or being hit with a big monthly bill.

It can be all to easy to regularly dip in and out of an overdraft without fully considering the overall cost — and whether borrowing could be cheaper elsewhere.

But now, the UK’s biggest current account provider will shake up the way overdrafts are charged.

Lloyds Banking Group, which has over 20 million personal current account customers, will change its overdraft charges from November.

It says more than nine in 10 of those with its brands Lloyds Bank, Bank of Scotland and Halifax, will be left either better off or in the same position financially. Lloyds will have a “pay-as-you-go” system to help people keep on top of their finances. Customers will be charged a single rate of 1p per day for every £7 of planned overdraft usage. The banking group is also removing some fees and charges - including for unplanned overdrafts. Lloyds says the moves will mean, overall, it makes less money from overdrafts.

The Financial Conduct Authority (FCA) has already said it is putting high-cost credit, including overdrafts, under the spotlight. Consumer group Which? previously found some unarranged overdrafts potentially cost more than a payday loan. The Competition and Markets Authority, has said that in 2014, £1.2 billion of banks’ revenues came from unarranged overdrafts.

Martin Lewis, founder of MoneySavingExpert.com, says: “Charges for breaching your overdraft limits have been a scourge for many years.” He says: “People often pooh-pooh credit cards, but if you’re overdrawn, debit cards are debt cards too.”

Andrew Hagger, founder of of MoneyComms.co.uk, says: “I’m sure Lloyds won’t be the last bank to review its overdraft tariff in the next few months.”