Free banking is fast becoming a myth.

The vast majority of people say they don't want to pay for their current account, yet most are already doing just that.

But it is still possible to avoid adding to bankers' profits without resorting to stashing your cash in a shoebox under the bed.

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Three-quarters of consumers are against the idea of banks charging for current accounts. In a survey by financial comparison website, eight out of 10 also said they wouldn't be willing to pay even a small fee. But for most account holders, fee-free banking is already a thing of the past.

Michael Ossei,'s personal finance expert, says: "Banking is only really free for those who never go overdrawn. Everybody else is paying in some way or another through myriad charges or less competitive rates."

According to financial information provider Defaqto, the number of "packaged accounts" – those which charge a fee in exchange for additional benefits such as travel insurance – has more than doubled since 2006, and they now outnumber accounts offering free banking for those who remain in credit.

One in five bank customers has a packaged account, with most of them costing at least £150 a year, but says many are wasting their money, as only three out of 10 holders make regular use of the added extras.

The latest entrant to the packaged account market is Marks & Spencer, which last month launched options charging £15 and £20 a month, with benefits including extra loyalty points for M&S credit card holders and a range of vouchers.

Ossei cautions: "It remains to be seen whether or not the price tags are too steep. Although M&S Bank claims the benefits are worth over £500, the perks are very much geared towards existing M&S customers – if you don't shop regularly with them, you won't make best use of the benefits and could end up overpaying for your account."

Kevin Mountford, head of banking at comparison site, says: "The key is to think about how you use your current account, and then shop around for the deal that best suits your needs. The monthly fees on packaged accounts vary across the high street. However, these fees do not tell the whole story, as the charges and benefits included by different providers vary enormously."

Even those with accounts that don't charge a monthly fee bank free only if they stay in the black.

A handful of current accounts pays credit interest. The most generous are Bank of Scotland and Lloyds TSB Classic accounts, which offer 1.98% if you pay in £1000 a month.

A few providers, including Nationwide and Santander, offer free overdrafts for the first few months after opening an account, but most charge interest right from the start. Rates for agreed borrowing are generally 10% to 20% a year, while charges for unauthorised overdrafts are often much higher.

Anyone who goes overdrawn without permission will pay a range of fees that can quickly add up to hundreds of pounds. For example, Clydesdale Bank, which has one of the highest unauthorised overdraft rates, at 29.9%, charges a monthly unauthorised borrowing fee of £25, plus a daily fee of £25, plus £35 for each unpaid standing order, direct debit or cheque.

Bank of Scotland this week raised its daily borrowing rates for authorised overdrafts, which start at £1 a day. The rate for a £3000-plus overdraft is rising by 50% from £2 to £3 a day, and the £2-a-day charge will kick in at £2000 instead of £2500.

The Co-operative's current account has a generous £200 free overdraft buffer, and the Coventry Building Society's current account allows you to go £250 overdrawn at no cost. But for the biggest banks, overdraft buffers only come with packaged, fee-paying accounts. So choose your account with care.

If you do need to borrow, consider cheaper alternatives such as:

l An interest-free credit card. Tesco Bank charges nothing for 16 months then a rate of 16.9%. M&S Bank and Halifax have cards that are free for 15 months, rising to 15.9 and 17.9% respectively.

l A credit card with a low permanent rate. Sainsbury's has a long-term card with a rate of 6.9%, while Barclaycard Simplicity charges 7.7%.

l A personal loan. Rates to borrow £5000 for three years start at just over 7% with Sainsbury's, M&S, Santander and Tesco.

If a bank overdraft is your only option, make sure you get it authorised first – and never borrow more than the agreed amount.