Borrowing £100 for a month on a short term loan can incur charges of as much as £20, but taking the same amount from an unauthorised overdraft could see consumers stung for £100, Ffrees found.
It comes after the Competition and Markets Authority issued final recommendations asking banks to implement their own caps on overdraft fees.
The CMA also asked banks to publish those limits, so that customers can switch to a better deal where possible.
Ffrees chief executive Alex Letts said that the firm's research showed the 40 per cent of people expected their overdraft to be the cheapest options for unsecured credit.
“In fact it is quite the reverse,” Letts said.
Following the CMA report, Labour MP and Treasury Select Committee member Rachel Reeves has since written to the Financial Conduct Authority (FCA) to demand the regulator steps in to set its own cap.
“To make sure millions of people get a better deal the FCA must now step in and take the necessary steps to protect the most financially vulnerable from rip-off overdraft charges, as it did with payday lenders,” Reeves said.