RaboDirect's interest rates compare well to overdraft rates. These can be as low as 8.5 per cent, but that rate is only available to National Irish Bank (NIB) customers who shell out €125 for its Prestige current account package.

Elsewhere, overdraft rates range from 9.75 per cent to 15.4 per cent. At Bank of Ireland and AIB, overdrafts also have additional set-up costs of €25 and €25.39 respectively. Cheaper interest rates are available on personal loans, however. These rates have fallen thanks to greater competition between financial services providers.

The lowest rate available is a fixed-rate 6.9 per cent APR from Tesco Personal Finance which, unlike most fixed loan providers, does not charge exit penalties if borrowers want to repay their loans early.

Over five years, or 60 months, a Tesco customer will make monthly repayments of €196.42 on a loan of €10,000. The total cost of the credit over this term will be €1,785.

On a sum of €10,000 borrowed from RaboDirect at a rate of 8.45 per cent, a 2 per cent repayment rate will result in monthly payments of €200. The loan will take 62 months to clear and the total cost of the credit over the term will be €2,255 or €470 more.

However, a RaboDirect customer who takes advantage of the flexible repayment options on its credit account can dramatically reduce their borrowing costs.

If they choose a 4 per cent repayment rate, or a payment of €400 a month on a €10,000 loan, the cost of the credit is just €995 and the term of the loan is just 28 months. Ad-hoc lump-sum payments will help chip into the balance even more effectively.

If the €400-a-month payment becomes too much of a drag on their budgets, they can easily slip back into the €200 a month rate, or somewhere in between. This option would not be so readily available if they simply selected a shorter-term personal loan.

RaboDirect's product highlights how borrowing costs can escalate over time. The longer consumers leave their debts to fester, the more interest they will pay.

The Financial Regulator has highlighted this issue in relation to the minimum payments on credit cards, which range from 2.25 per cent-5 per cent of the outstanding balance. Cardholders who only repay these percentages, or those who fall into the "minimum payment trap" as the regulator puts it, can easily find themselves with stubborn debts they cannot shift.