BANK of Ireland was accused last night of forcing customers into the "backward step" of using cash because of new rules for the operation of current accounts.
Experts said people would now opt to take out large chunks of their wages in cash to escape fees for repeated ATM withdrawals, and would not make payments electronically so they would avoid being hit with new charges.
This is because new rules mean that large numbers will be charged for each ATM and other electronic transactions unless they keep at least €3,000 in their current account at all times.
Most of the bank's estimated one million personal current account customers are expected to be caught by transaction charges after the bank made it more difficult for customers to get free banking.
Customers who do not keep at least €3,000 in their account at all times will face charges of up to 28c for each transaction from November 19.
At the moment, customers can avoid fees by lodging €3,000 to the account once a quarter and also making at least nine debit payments from their account each quarter. Alternatively, they can avoid fees and charges by keeping €3,000 in their account during the entire quarter.
From November the only way to avoid fees and charges on the Pay As You Go and Flat Fee accounts will be to stay in credit of at least €3,000 every minute of every day. No interest will be paid on this sum.
The new charging structure was condemned by the State's official consumer watchdog as a "lose-lose situation".
Karen O'Leary of the National Consumer Agency the new rules would act as a deterrent to smart banking.
"Bank of Ireland's new charges are a lose-lose situation, which will act as a deterrent to smart banking by encouraging people to use more cash and less electronic payment methods like debit cards."
"This is a backward step at a time when we are being encouraged to be less reliant on cash and follows similar changes by AIB to their free banking."
The agency said it would like to see banks charging consumers based on how they use their account rather than their ability to maintain €3,000 in their current account. The new rules do not apply to those with student, graduate, and golden years current accounts.
The new current account criteria come as thousands of Bank of Ireland and ICS customers have started to receive letters warning them their mortgage repayments are set to rocket.
Some 60,000 people have begun to get letters from the bank informing them that its variable rates are to shoot up by 0.5pc from October 24.
The increase affects residential and buy-to-let customers.
The move will mean monthly repayments will rise by more than €1,000 a year for those with €300,000 mortgages.
A spokeswoman for the bank said the mortgage rate hike was necessary to return the bank to profitability. BoI received a €4.7bn bailout from taxpayers.
It defended the changes to its current accounts as necessary to cover the cost of providing day-to-day banking services.