Which? compared the cost of borrowing £100 for 30 days and found consumers could pay up to £180 in fees if they borrow across two billing periods.
The findings also revealed that unarranged overdraft charges at some high street banks were as much as 7.5 times higher than the maximum charge of £24 on a payday loan.
Which? is calling on the Financial Conduct Authority to crack down on punitive fees for unarranged overdrafts.
During its review of the retail banking market, the Competition Markets Authority (CMA) found that over half (51%) of overdraft users went into an unarranged overdraft at some point. However, attempts by the CMA to curb unarranged overdraft charges are not going to tackle these exorbitant fees.
The consumer group found that NatWest customers could end up paying up to £180 in charges if they went across two billing periods, £156 more than a payday loan.
Lloyds, Santander and TSB customers would all end up paying £160 over two billing periods, £146 more than a taking out a payday loan.
A spokesperson from NatWest said: “We encourage all of our customers to contact us if they are going to enter unarranged overdraft regardless of the amount or the length of time. We offer a number of alternative solutions, such as putting an arranged overdraft in place, where the costs are considerably less.
“Customers are not charged if their unarranged borrowing is £10 or less and our Act Now Alert Service alerts the customer of upcoming unarranged borrowing to allow them time to transfer money to avoid unarranged overdraft fees.”
Lloyds and Santander both said they have variety of tools in place to help customers manage their finances and keep track of their money.
Vickie Sheriff, Which? director of campaigns and communications, said: “It’s not right that people with a financial shortfall can be charged so much more by the big high street banks than they would by a payday loan company – especially if the money is borrowed over two monthly charging periods. If banks can continue to set their own charges, then consumers will continue to be hit by exorbitant fees.
“The Financial Conduct Authority must use its current review to cap these high charges and ensure consumers cannot be charged more for unarranged overdrafts than arranged overdrafts.”
Mike O’Connor, chief executive at StepChange Debt Charity, said: “This research shows some of the serious problems that overdrafts can cause and further highlights the need for urgent action. Every day we help people who have regularly exceeded their overdraft limit and been hit with extra fees and charges. This has made getting back on track the next month an even more difficult challenge.
“Our latest research shows that 2.7 million people a year now use overdrafts just to meet everyday expenses. Without action, hundreds of thousands of people risk being stuck in a borrowing cycle, trapped by spiralling fees incurred through just trying to make ends meet. The time has come for the FCA to cap unarranged overdraft charges and look at the widespread problem of persistent overdraft debt.”