Cashpoint charge of £2.50 every time you withdraw

The swingeing fees are expected to be enforced if, as expected, the banks lose a long-running legal battle over rip-off charges slapped on customers who went into the red without prior permission.

The Supreme Court is widely expected to rule against the banks tomorrow in their ­dispute with the Office of Fair Trading over unfair deductions.

Industry insiders said that with banks ­desperate to re-build their profit margins after the credit crunch, free banking will be wiped out if the court forces high street ­lenders to slash their unauthorised overdraft fees and repay customers up to £22billion for unfair sums already imposed.

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Average fees for cashpoint machines which charge are already more than £1.68. Experts fear banks will ramp that up to claw back funds they may have to pay out. It is feared lenders will quickly find ways of making up any shortfall by hitting current accounts with monthly fees and charging for withdrawals at the UK’s 39,000 free cashpoints (ATMs).

MoneyExpert.com’s Pierre Williams said: “Banks will want their pound of flesh. They will look at imposing fees on what have traditionally been free banking areas. That means ATM withdrawals and perhaps accounts in credit.

“Private firms already charge for ATM withdrawals and high street banks would like to follow suit.”

About 24,000 machines in shops and pubs already charge £1.68 or more a time but 96 per cent of cashpoint business is done at free holes in the wall.

Critics said new charges would be spiteful after the banking ­system was propped up with billions of pounds of taxpayers’ cash.

Which? personal finance campaigner Phil Jones said: “That is outrageous.”

And the Consumer Action Group reacted with dismay. Among the many angry comments posted on its website yesterday, one read: “Bit of a blow if you only have £11.50 in the account and draw £10 as you are immediately into ‘unauthorised’ overdraft.

“I suppose we will go back to the old days when you got your wages in a packet and kept some of it under the bed. Maybe super­markets will benefit as everyone reverts to cashback.”

Cashpoint fees would be a blow to customers who take out small sums and people in rural areas who can’t get to branches.

Lib Dem Treasury spokesman Lord Oakeshott said: “It would be wrong to charge people for ­withdrawing their own cash.”

If the OFT wins it will pave the way for the watchdog to decide whether overdraft fees – as much as £39 a time – were unfair and would lead to a flood of claims for refunds.

The outcome will have far-reaching implications for the future of UK banking, according to commentators who say prudent savers are most likely to be stung.

David Black, of analysts Defaqto, said: “My assumption is we will see the end of free in-credit banking. The people who will be the losers will be the people who aren’t ­paying anything at the moment – the ones who always remain in credit.”

The British Bankers’ Association last night, trying to quash fears of any imminent changes, said: “There are no current plans to end free banking, either for cashpoints or current accounts.”

But they pointed out that the UK model was “unusual”. In most other countries people pay for transactions.