ONE reader, Mr M from Dublin, discovered last week that it pays to read bank overdraft documentation very carefully - do not assume the bank is going to get it right.

Mr M banks with National Irish and discovered, by accident that he had been paying 2 per cent extra on his overdraft for over a year.

How? After looking for an extension to his overdraft to buy £1,000 worth of discount Norwich Union shares he received a confirmation note from NIB telling him, inter alia, that he would be paying the single A rate (the usual personal overdraft rate) plus 2 per cent for the privilege of borrowing money from NIB.

Needless to say, he told NIB he was not going to pay such a penal rate of interest - a rate that usually applies to so-called "problem accounts". Mr M is anything but a problem account and has always stayed within his overdraft limits and paid off term loans on time.

After checking, NIB told him that there had been an "inputting error" which resulted in the A plus 2 per cent rate being applied to his overdraft extension. Closer examination of his previous statements showed that the inputting error had in fact taken place a year earlier when his normal overdraft was up for its annual review.

The end result? Mr M has been paying an extra 2 per cent on his overdraft for over a year. NIB were apologetic and assured him that the overpaid interest would be refunded in full.

Mr M accepts that he is partly to blame. Like most people who get confirmation for their over-draft he barely gives the documentation a glance and assumes that the bank has got it right. The lesson here is - do not make any assumptions and always double check the interest rate and terms of a loan.