The organisation's research – Fully Charged – said banks imposed unfair overdraft fees on their poorest customers in "a reverse Robin Hood effect". Poor people were subsidising richer customers, despite being the hardest hit by fees, it said.
The report found that banks penalised low-income customers when they went overdrawn through no fault of their own, and forced customers further into debt by offering consolidation loans.
Citizens Advice acting chief executive Susan McPhee said: "Despite all the talk from banks about how they were going to be more responsible and help people through the recession, here we see the real story: the banks are still imposing heavy charges on vulnerable people.
"While the charges are unfair for everyone, those who are poorest are having to fork out a much higher proportion of their income than those who are better off. Indeed, these charges mean the poor are actually subsidising the rich, like a reverse Robin Hood effect."
Citizens Advice said it has a client with poor mental health whose 2 overdraft resulted in 180 of charges over two months. Another person was charged 66 for going 60p overdrawn, and one 77-year-old was charged 300 in one month because of single bounced transaction.
Ms McPhee said: "These cases are at the extreme end, but they are not rare. And the fact they are happening at all is appalling."
The support and advice service is calling for bank charges to be "proportionate to their level of infringement". Customers who go overdrawn by pennies should be charged less than someone who is overdrawn by hundreds of pounds, it said.
Former Scottish Labour leader Wendy Alexander backed the Citizens Advice Scotland report. The Paisley North MSP lodged a motion with the Scottish Parliament urging the Scottish and UK governments and the banks "to work toward ending unfair charges that affect millions of customers".
"For people on low incomes, a hefty overdraft charge can lead to a vicious cycle which is hard to get out of," Ms Alexander said. "It is time banks ensured their charging regimes do not disproportionately hit their most vulnerable customers."
Liberal Democrat finance spokesman Jeremy Purvis MSP said: "Punishing overdraft fees can tip vulnerable customers already walking a financial tightrope into debt. It simply isn't right that someone on a low income should pay 25 or more to their bank just because they're overdrawn by a pound or two."
'Sneaky' Bank of Scotland charged student 48 in fees for 1p debit
JULIA Turner, a 19-year-old student, spotted a T-shirt which cost 5 and bought it. The problem was that she only had 4.99 credit left in her account, and although the purchase left her only 1p over her maximum limit, Bank of Scotland charged her a total of 48 in fees.
The 19-year-old, who lives in Newhaven, was stunned when she got a letter from the Bank of Scotland outlining the charges: a 20 administrative fee for going over her 500 limit, plus a further "unauthorised overdraft fee" of 28. Ms Turner, who is due to start a fashion course in Glasgow after the summer, has been told by the bank that she will have to pay up.
She said: "I thought I had a fiver left on my card, so I was shocked to receive the letter. I would have paid the 1p in cash if I had any idea I'd gone over. I thought if I ever went over my overdraft my card would be rejected, so I think it's a bit sneaky that they'd let me spend money and then charge a fortune. I am putting every penny towards my college fund so it seems a shame to pay such an unnecessary sum."
Ms Turner's father, Douglas, said the bank's attitude was a disgrace. He said: "I remember a time when banks actually cared about their customers. This practice might be legal but it's not right." At the time the Bank of Scotland said it was looking into the case.