Two million Barclays customers on fee-paying current accounts will see the cost of their overdraft hiked from April.

Yet as these accounts cost up to £300 a year before even paying for an overdraft, if you have one, you should ditch it.

Switchers can earn up to £100 by moving and can get an interest-free overdraft for a year. That's in addition to the huge sums saved by dumping an expensive account (see the Best Bank Accounts guide).

The news of the rate hikes on numerous Barclays accounts comes in the same week the bank published pre-tax profits of £11.6 billion. It is also paying £2.7 billion in bonuses to staff.

Huge hikes

The largest rise will hit those on the bank's Graduate Additions account, as the overdraft interest charged is jumping from 9.9% to 14.9%.

The account costs £84 a year to start with. Assuming a constant overdrawn balance of £2,000, the borrowing cost will soar from £198 to £298 a year.

Some account holders, on the Premier Life account, pay a whopping £25 a month for the privilege, equating to £300 a year. Overdraft rates on that account will rise from 12.9% to 14.9%.

Other accounts affected include Additions Active, Current Account Plus, Barclays Bank Account with Executive Overdraft, First Additions, Additions, Additions Plus, Additions Platinum and Platinum Barclays Bank Account. The new rates take effect from 30 April.

Ditch and switch

Fee paying accounts, which offer extras such as travel insurance and preferential overdraft interest rates, are usually expensive.

Many customers aren't even aware what they're paying for, and you can usually get the same extras for a lot less (see the Cheap Breakdown Cover and Cheap Travel Insurance guides).

Wendy Alcock, money analyst, says: "Anyone with a fee-paying account, regardless of provider, should switch and pay for any services included in the package separately. This will almost always work out cheaper."

What's more, many free account providers offer introductory bonuses. For example, Alliance and Leicester offers £100 cash and an interest-free overdraft for 12 months. First Direct also offers £100 (see the Best Bank Accounts guide).

A Barclays spokesman says: "We are continually reviewing our rates to ensure we get the best balance between the cost of providing the overdraft and the associated risk and, on that basis, some of our current account overdrafts will increase from the end of April."

Further reading/Key links

Top deals: Best Bank Accounts
Slash costs: Cheap Breakdown Cover, Cheap Travel Insurance