New research from Moneyfacts reveals that as many as 55% of current accounts on the market no longer pay interest to people who are in credit, while a further 28% pay a miserly rate of only 0.1% or less.

The average rate for customers with a balance in credit now stands at just 0.77% compared with a rate of 15%, nearly 20 times higher, that banks levy customers for taking out an authorised overdraft.

Barclays, HSBC and the Co-operative Bank are among the high street names no longer paying interest, while Lloyds TSB plans to stop paying interest to people with a standard current account from December 2010. The heavily public owned Royal Bank of Scotland and NatWest stopped paying interest on most of their current accounts earlier this year.

Before banks started scrapping interest on current accounts, that rate on offer was usually a meager 0.1%, nevertheless cutting it altogether will generate savings for the banking industry.

Michelle Slade, from Moneyfacts.co.uk, commented: “The loss of interest at 0.10 per cent is likely to make little difference to each individual customer, but for the banks it will be a significant cost saving."

"Most people bank with one of the big banks, so it is highly likely the majority of people are receiving no interest on the money in their current account.

"Anyone maintaining a significant balance in their current account should consider switching to an account that pays interest or move their money into a savings account."

The removal of interest on current accounts coincides with an increase in the promotion by banks of accounts which carry a monthly fee in return for perks such as free travel insurance or breakdown cover. However the benefits of these accounts are hotly disputed by industry commentators with many claiming they are not worthwhile.

The British Bankers' Asssociation commented by saying: "Current accounts are not, and never have been, intended for people's savings although many accounts do attract a small amount of interest. They are exactly what they claim to be, an account from which everyday transactions - such as direct debits and ATM withdrawals - are managed. "Unlike nearly every other country, UK banks offer fee-free transactions which do not cost customers any money if their accounts are in credit. Banks offer a wide variety of savings products where interest is paid and people should shop around for the account which suits them best."