Beat overdraft charge outrage. The best bank accounts for those who stray into the red

Although it can be difficult to find an account that will not charge you for using your overdraft at all - otherwise we would all be borrowing for free - some banks offer introductory periods of no interest, or buffer amounts, so that the odd mistake does not cost you.

This is Money has done the legwork for you to find current accounts with some of the best overdraft offerings.

CitiBank - biggest fee-free overdraft

If you can stretch to depositing £1,800 a month, Citibank's Plus Current Account includes a £500 interest-free overdraft - this is one of the largest fee-free overdrafts available for an account of its type.

What is is?

This account also has added perks that could sound very appealing if you consider yourself a bit of a globe trotter.

It offers account holders, and their immediate family, worldwide annual travel insurance  including winter sports coverage.

There is also the option of fee-free Dollar and Euro accounts run alongside your Sterling current account. This means you can withdraw money in different currencies from one debit card without having to worry about fees and hefty exchange rate loading.

This account appears on This is Money's best offshore current accounts guide. Find out more about it here.

Watch out for:

If you think it might be a struggle to deposit so much money in each month, it might be worth steering clear of this account - despite the tempting benefits.

Otherwise you will be charged a fee of £8 a month, which adds up to as much as £96 a year.

The charges over the first £500 do get a bit complicated. You are best to arrange access to a larger limit if you think you are likely to need it, otherwise you could be charged 29.8 per cent (EAR) for an unauthorised overdraft over £500, compared to 16.9 per cent (EAR), for arranged amounts.

On top of that there is a £25 charge for every transaction made, whether permitted or declined, beyond your arranged overdraft, capped at £100 per month.

If you want to extend your formal overdraft to more than £500 you will also have to factor in an arrangement and annual usage fee of 0.5 per cent, at a minimum of £20.

This is Money verdict:

This might be an account where the added extras are mainly aimed at those who spend their lives traveling round the world but, if you can afford the £1,800 monthly requirement it could be worth signing up, simply for its overdraft offering.

If you want a long-term solution, CitiBank's offering is your best option, as although the Nationwide account is likely to let you go into the red by the same amount, the offer is limited to a year.

• Interested? Check out the Plus Current Account for yourself here

Shopping habit: Running up an overdraft can be expensive. First Direct offers one of the most generous overdraft buffers

First Direct - £250 buffer and customer service

First Direct's First Account comes with a £250 interest and fee-free overdraft, as well as extra perks for new customers.

Although this won’t be the right account for you if you like to bank in person - First Direct has no  branches - the bank does pride itself on customer service and has received a number of awards for this during the past few years.

One of the major selling points is that First Direct offers you £100 to sign up and another £100 if you choose to switch to a different bank after less than a year.

While the idea of £100 cash immediately in your back pocket does sound appealing, it can take around three months to materialise and it is only available to new customers switching to the First Account.

The most important point to make though is that you need to commit to paying in £1,000 a month to hold the account, hold a qualifying savings account with the bank or keep your balance above £1,000. Otherwise you will have to pay a £10 monthly fee. The fee is waived for new customers for the fist six months, however.

Watch out for

The account gives customers an automatic £500 formal overdraft, with no arrangement fee, which can be extended depending on your personal circumstances. However, anything above £250 will incur interest charged at 15.9 per cent (EAR).

Still, a £250 fee-free overdraft is not to be sniffed at - plus, First Direct does allow for infrequent mistakes. Account holders are granted one informal overdraft every six months.

You will be charged a £25 arrangement fee for every day that you use an unauthorised overdraft, which is capped at £150 per month.

From November 10 2014, The informal overdraft set up fee will be replaced with a £5 fee for each day of unauthorised borrowing capped at £80 a month. First Direct and HSBC will also start sending automatic balance alerts to when customers in danger of going overdrawn.

This is Money verdict:

With no fee on arrange overdrafts and no interest charges on an overdraft up to £250, this account is one of the best deals currently out there. Plus, the free money is also a draw and it regularly wins customer service awards.

But don't make the decision based entirely on the switching reward. There may be no point in signing up to take advantage of the £100 cash if you can't pay in £1,000 a month and end up paying the £10 a month fee.

• Interested? Check out the First Account for yourself here

Nationwide - simple fees and free for a year 

Nationwide's Flex Direct account has a free overdraft offering for the first 12 months - the agreed limit will depend on your individual circumstances - and simple charges after that.

The building society does not charge interest on overdrafts, opting instead for flat rate daily fees.

After the introductory free period is over, you will either be charged 50p a day to use an authorised overdraft or £5 for each day that you stray more than £10 over your authorised limit.

The real draw on this account is that accountholders can earn 5 per cent interest on balances of up to £2,500 paid every month, which could be worth up to £125 - so long as you can commit to paying in £1,000 each month.

This will be forfeited if you dip into your overdraft even once that month.

The Flex Direct account features on This is Money's five of the best interest-paying current account guide. Read more about it here.

Watch out for

You have to make sure you set up an overdraft limit with Nationwide, otherwise you will pay £5 each day you go into the red by more than £10.

In addition, there is a £5 fee for every transaction out of your account when you are in your overdraft, although there is a £60 cap per month.

This is Money verdict:

Flex Direct is one of the current accounts offering the best money-making opportunities for those in the black, and with the simplest charges for the times you do stray into the red.

Although the fee-free period is only temporary, it could be a useful if you are looking to work your way out of your overdraft.

If you want to stay with an account that does not charge you for using your overdraft, make sure you remember to switch after the first year.

There is no minimum deposit requirement or monthly fee on this account as with the First Direct and CitiBank offerings, so this is one of the most accessible accounts for those looking for a good overdraft deal.

• Interested? Check out the Flex Direct Account for yourself here

Tropical Paradise: Could your current account help get you there?

Clydesdale Bank - best for low interest on planned borrowing

Clydesdale bank offers a current account with a permanent low interest on overdraft borrowing which could save occasional users money.

The Current Account Direct charges just 9.9 (AER) per cent on authorised overdrafts. This is much lower than the usual 19 or 20 per cent interest charged by most banks.

Unplanned borrowing however is charged at a much higher 29.99 (AER) per cent.

The account also rewards those with positive account balances paying 2 per cent interest on up to £3,000.

Clydesdale Bank will currently pay switchers £150 as long as you can pay in at least £1,000 a month into the account and maintain two or more direct debits.

Watch out for:

Accountholders must make a minimum monthly deposit of at least £1,000 to the account in order to be eligible for the in-credit interest.

As mentioned above only pre-agreed amounts are charged at the low rate so you will need to make sure to fix up an authorised overdraft to prevent hefty interest charges.

On top of this, using an unplanned overdraft (even by less than £10) costs £25 each month.

Each day a customer spends in an unplanned overdraft and the bank has to make a payment from the account will cost an extra £25.

If that wasn't enough, any returned payment will cost accountholders a whopping £34.50 - with a 50p notification charge.

This is Money verdict:

As long as accountholders agree a planned overdraft with the bank, this account could save the occasional borrower money in interest.

But forget to set this up and this account will cost you more than the rest with much higher than average return item fees and overdraft usage fees.

So this is really an account for those that are sure they will keep on top of their overdraft limits.

• Interested? Check out the Current Account Direct for yourself here

NatWest - best for controlling your finances

NatWest Select Account comes with one of the highest charges at 19.89 (EAR) per cent. But for those that want to avoid an overdraft all together it can help you to stay in the black.

What is it?

Its Overdraft Control Service (OCS) will reject any payments, such as direct debits and standing orders, that would take your account beyond your limit. So you avoid paying both overdraft charges and return fees.

This not only provides you with peace of mind, but also means you are not lumped with any extra charges during that awkward period between paying the bills and your pay check hitting the bank.

On top of that, you can opt for an alert service that will notify you of both your account balance and if you have gone overdrawn, by how much and how long you have to pay it off before you incur charges.

NatWest Bank: Offers an overdraft control service

The small print

The charges have recently been changed to a flat rate usage fee plus interest.

You will have to pay £6 a month to use an arranged overdraft beyond the account's interest free £10 buffer and you will be charged 19.89 per cent (EAR).

Informal overdrafts over £6 are also charged at £6 a day - capped at £90 a month.

If your informal overdraft is on top of your agreed overdraft limit, you will also be charged the £6 monthly usage fee.

The returned item fee is £6.

But if you do opt for the OCS, you will avoid most of these charges by staying out of your overdraft.

However, even with the OCS, some payments made using your debit card where the retailer doesn’t check the available funds in your account could still be charged, and may be subject to an extra fee.

This is Money verdict:

Although the bank has marketed the Select Account with introductory offers, as these are only available short term, the real draw of the account is that it is a sensible option which can help you to better manage your finances.

Using the overdraft control service helps to avoid the risk of overdraft charges as much as possible. Therefore it could be the best option for those looking for an account to safeguard against the odd mistake. And, at only £6 per month for an authorised overdraft, this could be a good deal if it stops you running up big unauthorised overdraft charges.

If you are really concerned about running up unnecessary charges you could also opt for a current account or basic account, that doesn’t allow any overdraft at all.

• Interested? Check out the Select Account for yourself here

Current Accounts Of The Week

£5 monthly reward and £100 to sign up

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Up to 3% interest & cashback on bills

123 Account

£100 gift card for new customers

M&S; Bank

Up to £240 cash for switchers

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