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Millions of Barclays Bank customers will be affected by radical changes to the way it charges for going in the red.

The bank claims the changes to its overdraft packages - to be introduced on Monday - will help those who exceed their agreed limits.

Customers who go into unauthorised territory will now be given a "personal reserve", an agreed buffer over and above their authorised overdraft limit (the average buffer is expected to be £250). No interest will be charged on this amount and they will incur no charges or fees for having the service on their account when they are not using it.

This isn't free, of course: if customers use it they get charged £22 for every five days, although payments won't be bounced while you're within the reserve limit. Use it for the entire month and the charge is £88.

At the moment, those who exceed their limits are charged £30 per time up to a maximum of £90 in any one month. If a customer goes beyond their Personal Reserve limit or they do not have a Personal Reserve and have spent beyond their agreed limit then items will be returned unpaid (unless a guaranteed transaction) and a fee of £8 will be charged.

Andy Harris, head of current accounts for Barclays said: "We know from our research that customers appreciate the certainty, simplicity and transparency that Personal Reserve will bring. Most competitors' overdraft charging structures are highly complicated and difficult for customers to understand. The benefit of the new Barclays structure is that a customer knows exactly what payments are going to go through, what they are going to get charged and when."

But Kevin Mountford, head of current accounts at moneysupermarket.com, is unconvinced. He said: "There is real confusion and lack of transparency when it comes to overdraft charges. Several banks have tried to simplify this, the latest being Barclays with its Personal Reserve. However, I don’t think they are making the system any easier for consumers as the Personal Reserve isn’t as clear as Barclays make out, indeed it has had to set up a video blog just to help explain it to customers.

"The truth of the matter is that if overdraft charges were lower banks wouldn’t need to resort to confusing 'reserves' and 'buffer zones' to try and make the charges more palatable.

"Barclays has declared 90 per cent of customers it approached have ‘chosen’ to accept the offer of a Personal Reserve, however as this was a positive opt out I am not sure if the acceptance rate is as much to do with customer apathy or confusion, as much as anything else.

"Time will tell whether Barclays has created a useful current account innovation, or simply added further confusion to an already chaotic market."

The new system will not help those who stay within their agreed limit, as the authorised overdraft rate jumps from 15.6 per cent to 17.9 per cent.

Pundits reckon that the accounts best for people who regularly go into the red but stay within their limits are from Alliance & Leicester (its Premier account is a longstanding favourite), Abbey and Norwich & Peterborough building society.

Each of these institutions has a 0 per cent offer of some description - Norwich & Peterborough on overdrafts of up to £500, and the other three for an introductory period of 12 months.

New customers at Barclays get 0 per cent for the first year too.

Andrew Hagger of Moneynet.co.uk says: "Five days should be sufficient for the majority of people to return their account to order or contact the bank to discuss the possibility of a temporary overdraft increase. A further positive is that Barclays is also reducing the charge for unpaid items from £35 (max one charge per day) to £8 per item from 18 August.

"Whilst the move from Barclays seems to be attracting some unfair criticism surrounding a lack of transparency, the deal is fairer and a big improvement on the previous charging structure."

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