The bank currently offers students interest-free overdrafts and often customers are offered the option of raising their limit mid-way through their course.

Those who did between 2002 and 2016 were wrongly charged interest on the extra cash they borrowed. The bank made the discovery during a business review earlier this year.

A spokesman for RBS said: “When we make a mistake, we do all we can to make it right. Our terms and conditions on our student account were not fulfilled so we are refunding all interest charged over that period.”

The bank has been contacting customers since August 15 and many have already had refunds. Customers will be repaid the charges, plus 8 per cent interest per year.