Millions of Halifax current-account customers will have their overdraft charges cut before the end of the year, it has emerged.

The bank, which has more than 5m current-account holders and which was rescued by Lloyds Banking Group earlier this year, will write to most customers next month to inform them it is moving to daily overdraft charges.

Currently, customers are charged £28 a month for an unauthorised overdraft facility, plus fees of £35 for each payment while they are in the red (up to a maximum of three per day).

Under the new structure, customers will pay a daily fee depending on the type of overdraft they have.

Customers who arrange an authorised overdraft of up to £2,500 will be charged £1 a day for each day they use the facility. Those who use an arranged overdraft of more than £2,500 will be charged £2 a day, while those who fall into unauthorised overdraft will be charged £5 a day.

The daily charging structure is already in force for Halifax’s Reward Current account, launched in February. Most of its other current accounts will be switched to the new system in December, with letters going out next month.

However, the Halifax Cardcash, Easycash and Student current accounts will be unaffected.

Several big banks have changed their charging structure for unauthorised overdrafts since a High Court test case was jointly launched by the Office of Fair Trading (OFT) and seven major banks and a building society.

Earlier this month Royal Bank of Scotland (RBS), which also offers current accounts under its NatWest brand, announced it was slashing fees for returning bounced cheques and standing orders from £38 to £5, while fees for paying for goods while overdrawn have been halved from £30 to £15.

RBS has also cut its monthly maintenance charges for unauthorised overdrafts from £28 to £20, with guaranteed card payment fees down from £35 to £15.

The test case is currently being heard by the House of Lords, after the banks involved appealed against an earlier decision that the charges did come under the scope of the OFT.

If the Lords find against the banks it will pave the way for a further hearing to decide whether the charges are fair and, if not, what a fair charge would be.

Banks have so far paid out £559 million in refunds to customers who have reclaimed the fees, while nearly one million claims have been frozen while the test case takes place.

Mike Regnier, director of current accounts at Halifax, said: “We have opened over 500,000 Reward current accounts since its launch in February 2009.

“Customers find the daily overdraft charging structure clear and easy to understand. We believe the introduction of this charging structure is the right thing for our current account customers.”