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- Guide to switching current accounts

If your bank is taking liberties - as well as exorbitant fees and making unreasonable charges - don't suffer in silence, play them at their own game, get your own back and save yourself over £12,000 in the process!

Until recently high street banks were in a privileged position in that they could, by and large, slap charges on those who slipped into the red and the poor account holder had to just take it on the chin.

Easy money for the banks and ironically making it even harder for the consumer to claw their way out of debt, which is how the banks like things!

But now many of these penalty charges have been deemed unfair by the Office of Fair Trading and the beleaguered consumer is now in a position to fight back and seek compensation. The ability to make retrospective claims for unfair charges, could, according to banking analysts Credit Suisse, see the banks having to fork out a hefty £7.2bn in compensation.

Online guides including AOL Money's How to reclaim bank charges have already empowered consumers to claim back unfair charges from banks. But the floodgates are likely to be opened wide on claims when the OFT makes its final ruling on charges in the coming weeks.

It is likely to insist that charges of £30 or £40 for going into the red are simply not justified. The OFT has gone on record as stating that unauthorised borrowing charges should not be allowed to exceed £12.

It seems the tables may now be turned on banks so what can you do to make sure that in future you are not taken for a ride by your bank or credit card provider?

AOL has compiled a top 10 for those looking to hit back.

1 Claw back those bank charges

Make your complaint known to the Financial Ombudsman Service. It is estimated banks have already paid out around £50m to customers who have gone to the ombudsman or threatened court action, rather than defend the fees. Claiming a refund is by no means a forlorn hope, banks are not in a strong position with the OFT ruling imminent so they are taking a conciliatory stance for once!

The average refund is about £1,000 but some have been a lot higher, with the highest known refund £17,900

Template letters for compensation can be downloaded here:
First letter, second letter, third letter

Saving: £2,500

2 Claim for credit card fees

In line with the recommendation for current account charges, the OFT has already stipulated that credit-card providers reduce late payment fees to a maximum £12.

Look at your old statements over the last six years and see what you have been paying if you have been stung with high penalty fees then write to your card provider and ask for a refund - typically this will be the difference between what they have charged you and the recommended £12 charge.

If you have been paying £30 each month over six years then the saving is pretty substantial - a saving of £1,296

3 Reclaim mortgage fees

Exit penalties on mortgages have long been frowned upon by consumers and more recently by the regulator, the Financial Services Authority (FSA).

These penalties relate to a charge applied by a mortgage provider if you close your mortgage and move to another lender. (Not the same as early redemption penalties which apply if you close a mortgage during a special rate offer period).

It is not always the exit fees themselves that have caused the rumpus, but the huge increase in the amount charged in recent years.

The FSA is insisting lenders are more transparent in how they impose the exit charge. If it is raised during the mortgage term, lenders must now notify borrowers and justify the raise to the regulator.

Anyone who paid an exit fee that went up during their mortgage term (check your loan contract) could claim a refund - the difference between the fee at the start and end of the mortgage.

This is likely to net you in the region of £150.

4 Cancel payment protection cover

All credit card holders will either have bought or at least experienced the hard sell of payment protection cover.

The OFT estimates this incredibly expensive and largely unnecessary insurance has cost UK consumers £1bn over the years. In theory, these policies sound attractive as they cover your loan repayments if you are unable to work due to an accident, sickness or redundancy.

But these policies are costly only cover the minimum monthly payment and there are usually a whole string of exclusions, which in many cases have not been explained to customers during the sales process.

If your credit card or loan provider has sold you PPI without adequate product explanation, you may be able cancel it and claim your money back.

A cancellation of a policy could save you in the region of £1,800 on a £10,000 loan over five years. Saving: £1,800

5 Travel cover

Banks frequently tag on a few extra services in an effort to attract or keep your custom. Travel insurance and air miles are obvious examples.

Travel insurance polices that come free with either bank accounts or credit cards, typically offer only very basic cover. You may not be aware until it is too late that your policy only provides cover in Europe and no cover for activities such as skiing, golf or diving. There are likely to be other exclusions too.

Hard to quantify what this might cost you, but let's assume you broke an ankle on the ski slopes, transporting you down from the mountain to hospital without any travel insurance in place, could leave you a bill in the region of £1,500 on top of any loss of earnings from being absent from work!

A non-bank arranged travel policy could then save you £1,500

6 Switch your credit card

If you have an outstanding balance on your credit card, check what you are paying in interest. You could be paying, say 17pc interest on £5,000 when you could switch and enjoy an introductory 0% interest for 12 months. You'd be mad not to switch and try and get your balance down at the same time.

You could save in the region of £850 in charged interest.

7 Avoid costly ATMs

Convenience is all very well but it usually costs. Try and avoid ATMs at garages or in bars or railway stations as many of these charge a fee of £1.50 for any withdrawals.

There should be enough non-charging ATMs locally so that you can plan ahead and avoid paying for the privilege of accessing your own money.

Even using these ATMs just once a fortnight, will cost you £40 over the year.

8 Make your cash work

Most banks and building societies pay miniscule levels of interest on their savings accounts. Try and avoid leaving large amounts of cash in a current account. Instead you could maximise returns from cash by investing in a higher rate account or even better use up your £3,000 Cash Isa allowance.

Many savings accounts pay around 1pc or less on savings accounts while you can currently get 5.5% tax free from a Halifax ISA account - so you could be £135 better off

9 Remortgage

Remortgaging has really caught on in recent years, with the internet helping to speed up and increase levels of business.

Anyone paying their lenders standard variable rate (and there are millions of them) there is always the option to switch to a better rate with another lender, in most cases without penalty.

If you are paying your mortgage lender's standard variable rate (SVR) you could save thousands of pounds a year by switching to a better deal.

The general rule of thumb is that if you are paying your lenders SVR, you are probably paying around 2% points more in interest than the cheapest deals on the market. In other words, on a £200,000 mortgage, you could be paying £4,000 more each year in interest than you need to.

Saving £4,000

10 Shop around for investment funds

Banks have long had a captive audience when it comes to investment products, so there has been a lot of cross selling. You have a bank account with them and they see this link as the ideal opportunity to sell other investment products - and historically it has usually been their own mediocre products which have been flogged. The upshot is that many high street banks have attracted huge sums of money to funds that have shown pretty lousy returns.

To give you an example the Abbey UK Growth fund has attracted £1.25bn of money from investors but has returned 55.43% over three years compared to the best fund in the UK All Companies sector, the Old Mutual UK Select Mid Cap fund which returned 114.75% over the same period. The Natwest Growth fund fared little better either, returning 53.9% over the period. Both the Abbey and Natwest funds failed to figure in the top half of funds in a sector of 339 names.

So for a £1,000 investment over three years Natwest and Abbey would have returned £539 and £554.30 respectively, compared to £1147.50 from Old Mutual.

Investors are better of by £608.

For some people this may even be a conservative estimate, but by following these best practice tips, consumers could save themselves £12,744 by giving the thumbs down to their bank and voting with their feet.