The U ‘personal account’, founded by Alex Letts, the founder of prepaid account service Ffrees, has launched offering an alternative to ‘free-if-in-credit accounts

A current account competitor that doesn’t require its customers to join a bank, U promises to allow customers to help ensure all bills are paid while avoiding overdraft fees. The account also comes with a free contactless prepaid MasterCard debit card.

It makes its money from users paying for the services they actually use. As well as a monthly fee, which can be between £0 and £10 a month, there are fees for payments out, ATM withdrawals, paper statements, and extra accounts. The price varies depending on how much the user pays per month.

In addition, there is a £1 dormancy fee after 60 days of inactivity.

Alex Letts, CEO of U, said: “The dirtiest secret in the UK banking sector is with the way people are charged for ‘free-of-in-credit’ accounts which are far from free for 24 million people across Britain. In fact, 44% of these so called free accounts are actually incurring fees.”