I am getting so sick of people who should know better saying that if the banks are made to hand back all the money they have taken from customers’ through bank charges, then it will mean the end of free banking for the rest of us. Let’s get one thing straight – there is no such thing as free banking in this country.

If these people, some of them supposedly on the side of consumers, actually bothered to read the report into current accounts published by the OFT, last year, they would realise that “free banking” is a myth perpetuated by the banks to keep us all from questioning why they do not pay interest on current accounts when in credit as a matter of course. Or where they do pay, it’s derisory for the most part, unless you pay a monthly account fee.

The reality – as the OFT report makes perfectly clear – is that the banks make far more money from not paying interest on our current accounts than they do from overdraft fees. Hundreds of millions more to be precise. As the pie chart on page 18 of the report makes abundantly clear the banks make £4.1 billion a year by not paying interest on our current accounts, compared to £2.6 billion from overdraft charges.

Why does this matter?

It matters because this is money that should be in the pockets of hard working families not the banks. If you manage your bank account carefully it is possible to avoid unauthorised charges – but no matter how well you manage your current account it is highly unlikely you will be paid a fair rate of interest.

So the next time someone says the end of free banking is almost upon us, cheer up as it should mean that banks will finally have to pay a fair rate of interest to all customers who keep their accounts in the black.