Barclays has announced plans to overhaul its current account banking structure, thereby reducing charges for customers who dip too far into their overdraft limit.

"We have listened to our customers and acted on this feedback by completely revamping our unauthorised overdraft service, replacing it with the new Personal Reserve,” said Mark Parsons, managing director of current accounts at Barclays. “Our customers wanted a simple, clear way of managing payments when they go beyond agreed limits. The Personal Reserve gives certainty about when payments will be paid and when they won't, with just two simple, lower charges. Our new approach has been tested with consumers extensively over the last two years and we are confident that our products will promote account switching to Barclays."

Beginning 2 June, 2008, the banking giant will introduce “a fundamentally new approach to overdrawn accounts”, in order to achieve this goal for consumers. Barclays will further offer its customer base a simplified range of new current accounts for personal banking. The new structure will allow customers to choose between an interest-bearing current account and a new packaged account; and Barclays stresses that the bank will maintain its commitment to maintaining free in-credit banking as an option for customers.

Personal Reserve, the new overdraft service, has been described by Barclays as a “safety net” for customers who exceed their agreed overdraft limit. This safety net will also reportedly work for customers who go overdrawn even if they have not previously set up an overdraft limit. The bank says the August 18th launch of this service will provide their customers with “the peace of mind that payments will be met, putting the customer in control of their finances.”

Trough use of Personal Reserve, a customer will have access to the service for five business days after paying a single flat fee of £22. During this five day period, a customer may use their reserve as many times as they wish. If customers do not go beyond their Personal Reserve amount, payments will be honoured.

While Barclays indicates that the average reserve amount will be £250, they will communicate Individual Personal Reserve amounts to their eligible customers between June and July. The bank stipulates that customers will be required to pay for their reserve only in the event that they use it all. Those existing customers who do not wish to enable the reserve service will be given an opportunity to opt out. Barclays boasts no individual transaction fees, no arrangement fees and no interest charges on the amount used within Personal Reserve.