Borrowing from Wonga for a month can work out cheaper than the Halifax

Using an overdraft at a high street bank can cost more than taking out a payday loan, research has shown.

Which?, the consumer group which conducted the study, said that the mainstream credit industry was in as much need of regulation as the much-criticised fringe players.

The research shows authorised overdrafts with a leading bank can be as costly as a payday loan with companies such as Wonga. For example, borrowing £100 for 31 days will cost £30 with a Halifax authorised overdraft or £20 with some Santander accounts. Borrowing the same sum for the same time with a payday loan company costs between £20 and £37.

Which? found that, in the same way payday loans can be rolled over and mount up to a