High street bank Santander has launched a new fee-free buffer on overdrafts that incorporates a daily grace period.

Customers can now go up to £12 overdrawn on their accounts without incurring overdraft fees.

The grace period lasts until 16:00 the same day, giving people the chance to avoid overdraft fees altogether by topping up their savings accounts.

Santander is also contacting customers via text and email to allow them to stay on top of their finances – which is part of the high street bank's increasingly digital offering.

Liz Chang, director of banking at Santander, said: "We are committed to helping our customers manage their finances more closely and the clear and transparent changes we are making demonstrate this."

She added that mobile banking, including access to accounts via smartphones and tablets was helping to improve service levels at the financial institution.

The bank has also increased its daily, arranged overdraft fee by 50p to £1. this affects some of its Preferred, Reward, Premier and Choice current accounts.

The overdraft fees on some current accounts have also increased from a capped maximum amount of £5 to £10 per month.

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