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Martin Lewis has issued a stern word of warning for bank account holders over a key principle to remember. He shared the tip on his BBC podcast explaining some key numbers to bear in mind.

The financial journalist share some guidances around the overdrafts that can apply to your bank account. He urged listeners to make it a priority to clear the amount if they have gone into their overdraft.

Mr Lewis said: "Overdrafts almost invariably are the worst form of borrowing, but people don't feel like they are borrowing." He warned that many people make a costly mistake here as they don't understand the numbers involved.

He explained that a typical credit card rate with a high street bank is 24.9 percent, while a typical overdraft with a big name provider is 40 percent.

The consumer champion said: "There are many people out there who are overdrawn at 40 percent interest and then are using the money from their overdraft, at 40 percent interest, to pay off their credit card at 24.9 percent interest, which is actually cheaper.

"You'd be better just to pay the minimum on the credit card and try and reduce your overdraft. It is an absolute must remember that overdrafts, ever since the regulator changed the way that overdrafts operate, from going from a fee and completely bastardised the market, just in my view, just at the start of the pandemic."

The Financial Conduct Authority brought in new rules from April 2020 ensuring that banks could only charge customers an annual interest rate on their overdraft, and not apply any fees or charges. Mr Lewis continued: "Overdrafts with pretty much all high street banks are locked in at 39.9 percent, way more than a high street credit card.

"Clearing your overdraft if you have one, unless you happen to have one of the few that is in a buffer zone or at zero percent, is normally your financial priority over clearing credit cards. Treat your overdraft like a debt."

Mr Lewis gave an example of how you could structure clearing the debt, by committing to paying off £100 of the overdraft each month. So if you have an overdraft of £600, you could work to get this down to £500 by the start of next month.

He warned: "It's very difficult to think of it conceptually with an overdraft, which is why it's really dangerous that it's at 40 percent." Some providers offer a buffer and don't charge you interest up to a certain amount if you go into your overdraft.

For example, Nationwide Building Society does not charge FlexPlus, FlexDirect or FlexAccount customers any interest on the first £50, although you pay 39.9 percent variable on amounts above this.

Similarly with First Direct's 1st Account, you get a £250 buffer but then pay 39.9 percent interest on any overdraft above this level.