In an increasingly competitive banking market, financial institutions claim Irish customers are getting a good deal on bank charges. The banks frequently cite European-wide surveys that count the Irish institutions among the cheapest when providing financial services.

Yet when you see Irish banks continuing to make millions of pounds in profits every day, it can make you wonder whether you are paying more than your fair share for their services. And given the complexity of charging structures, more importantly, how would you know if you were paying over the odds?

Businesses and personal customers are becoming more aware of how much they should be paying for bank services. Computer packages that allow you to easily check whether the rate of interest you are paying on your overdraft is correct, combined with greater knowledge when it comes to managing your money in the most efficient way, have taken much of the complexity out of understanding bank charges.

Mr Pat Delaney, director of the Small Firms Association, notes a great change in the attitude of the banks and their customers in the past eight years. "Overcharging is not a significant problem for small businesses now. It is not as widespread as some people are saying."

Galway-based financial consultant, Mr David McCarthy, says problems tend to arise due to human error. Something as simple as a bank official wrongly coding a transaction can attract a substantial fee that will go unnoticed unless a customer spots it.

For instance if you are transferring money from one business bank account to another electronically the charge is likely to be around 25p. But if the teller incorrectly codes that transaction as though you physically transferred the cash from one account to another, the charge grows substantially. If the amount in question was £10,000 (€12,700) being moved from one account to another, an incorrect billing charge could end up costing a business £100 instead of 25p.

Mr McCarthy cites a recent example his firm uncovered for a client. In this case a businessman took out a commercial mortgage over five years. At the end of the loan he examined the statements and based on a rough calculation thought he paid too much interest.

When the case was investigated, Mr McCarthy's firm discovered the client's loan was not recorded at the bank as a commercial loan but as a current account with an annual overdraft limit that was reviewed. For two years the loan attracted more expensive overdraft interest rates and a surcharge of 9 per cent was added when it exceeded the limit outlined on the account.

This led to overcharging of around £40,000. This was pointed out to the bank and the monies were immediately refunded," according to Mr McCarthy. The strange thing about this particular case is the error should have been picked up by the bank but no reason was offered as to why this failed to happen.

he issue of bank charges was the subject of renewed scrutiny when Business & Finance magazine revealed last week that AIB had paid more than £100,000 to a Waterford hotelier in an out-of-court settlement for overcharging. The money was reportedly paid to settle a claim for overcharging of £185,000 plus interest of about £100,000. The claim related to a number of banking charges over several years.

The settlement is said to have also involved around £200,0000 in costs. AIB said it does not comment on individual cases.

Mr Delaney advises small businesses to always identify the charges being levied by the banks and check that when these hit your account they are at the agreed rate. And while small businesses complain they do not have the bargaining power of the bigger corporate clients Mr Delaney says once a business is in good standing with the bank there is always the possibility of improving the deal on fees and charges.

"Businesses should always look at statements and query any obvious mistakes. There will usually be no lack of assistance on the bank's part in explaining the discrepancy and remember small businesses can also look at the international bank to provide more competitive services if they are not satisfied."

The Irish Small and Medium Enterprise Association (ISME) is less convinced about the bona fides of the banks regarding bank charges. "There are still a lot of companies making a good living from checking whether customers are being overcharged by their banks," he says.

Small companies typically pay higher interest rates on overdrafts and commercial mortgages than large companies and ISME says it is constantly examining the rates applied to individual businesses in the sector. "ISME is working with a consultant on bank charges and will be advising members on the outcome," says Mr Jim Curran, ISME's head of research. "We will be doing a broad survey of charges and will be lobbying the banks and the authorities where overcharging is discovered."

Mr McCarthy says businesses should always bargain with their bank on fees and charges. "The day is gone when you can sit down and know the bank is providing you with the most cost effective deal."

Most of his clients are self employed business people who are not necessarily looking to uncover incidences of overcharging but for advice on how to get the best deal out of their bank in the future. Often it is just a matter of reorganising the way they use their cash or the type of accounts and facilities they hold, he says.

The banks have made progress in the past decade in terms of explaining bank charges to customers and now notify customers of the charges before they hit their account.

Customers with personal accounts can easily keep check of charges just by paying attention to their monthly bank statements and reading notification of fees and interest rate charges, according to the experts.

By understanding the matrix of charges it may prove to be cheaper to use the Internet or telephone banking to do your banking. Maintaining a minimum amount in your account may also keep the cost of bank charges down.

Customers with current accounts - through which they can withdraw money through cash machines and write cheques - usually receive a statement once a month. It details the list of transactions moving through your account recording any lodgements, withdrawals and payments and the rate of interest being charged if overdrawn.

At the end of each quarter, this should be followed by another statement, listing the fees incurred through those transactions which will be charged usually two weeks after that statement.

The easiest way to get to grips with your bank statements is to regularly watch the closing balance shown in your account at the end of each month, the rate of interest that applies, and then to note the amount of fees charged each quarter.

This exercise allows you to build up a profile of your account and should help you to quickly spot irregularities. You should generally find there will be the same number of transactions going through your current account every month or quarter so your quarterly charges should be broadly the same. If, however, your charges for any quarter look to be unusually high then it is usually worth investigating further.

Checking how much interest you are being charged is a more difficult task and tends to prompt most queries.

As bank interest is charged on the daily balance in your account it is almost impossible for customers to accurately calculate the amount of interest they are actually being charged, but Mr McCarthy suggests that customers should still be able to keep an eye on these charges.

He suggests that similar to monitoring fees, customers should be able to check how much interest they are being charged each quarter. In the absence of any movement in interest rates, he says bank customers will find that they should be paying broadly the same amount of interest every quarter.