Lloyds TSB Overhauling Overdraft Charges

by from money.co.uk, 30 Nov 2010
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On 2nd December Lloyds TSB are making big changes to their overdraft charges. If you're a current account customer you should take note - it could cost you 5 a month extra.

What's the issue?

From 2nd December, 2010 Lloyds TSB will be changing the way they charge current account customers who go overdrawn.

They're revamping the charges applied to both planned (borrowing that has been approved) and unplanned overdrafts (borrowing that hasn't been approved).

So if you're a Lloyds TSB current account customer it's important that you review the changes and their impact on your finances - it could mean that using your overdraft is going to get significantly more expensive.

The main changes can be summarised as follows:

  • A 10 overdraft buffer will be added to all current accounts. So if you go overdrawn by less than 10 - or 10 over your interest-free & fee-free limit - at any time you won't pay any fees or interest charges.
  • A 5 monthly overdraft usage fee will be charged any month you go into your overdraft. This is a one off charge that you will need to pay each and every month you go overdrawn by more than 10 (or 10 over your interest-free or free-free limit). As this is in addition to the interest rate you pay now it could make your overdraft borrowing significantly more expensive.
  • The charges applied to unplanned overdrafts will be reduced. Full information on the new charging structure is available on the Lloyds TSB website.
  • The returned item fee will be cut from 20 to 10 per item. You won't be charged for any returned payments less than 10 in value.

In addition it's worth noting 4 things:

  • If you don't go into your overdraft over the course of a month you won't be charged. The 5/month fee only applies to those who use their planned or unplanned overdraft facility.
  • The 5 fee will only be applied once a month no matter how many times you go into your overdraft.
  • If you're already overdrawn, you'll incur your first 5 charge on the 2nd December, 2010. So you may want to look at switching current account to one that charges you less.
  • Those with an Under 19s account will not be affected by these changes.

Full information about the changes are available on the Lloyds TSB website.

To compensate for the changes Lloyds TSB will be giving all customers access to free Mobile Banking. You can use this to stay better informed about your current account balance and make sure you don't go into your overdraft and incur the monthly fee.

However, if you do dip into your overdraft you have until 3.30pm the same day to transfer cleared funds into your account before you are charged. They refer to this as a 'Grace period' as it's a way of avoiding the 5 fee.

Lloyds TSB will also stop paying interest on in-credit balances from 2nd December, 2010. A rate of 0.1% is currently paid so it's not a significant change but one to be aware of nonetheless.

The exception to this is those with a Vantage or Plus current account who will receive in-credit interest up to 7,000 and 2,500 respectively providing they meet the account ts and cs. If terms and conditions aren't met, or you have in excess of the 7,000 or 2,500 amount no interest will be paid.

If these changes mean that your current account is going to get less competitive it's worth seeing whether you can get a better deal elsewhere. Take a look at our Goal: I want to get the best current account for a step by step guide to finding the current account that gives you the best deal whether you use your overdraft or not.

We have done our very best to make sure that the information included in this Deal is accurate. However, sometimes offers can be withdrawn or changed at the last minute so please do check that you're able to redeem this Deal before parting with any money, or going out of your way to take advantage of the offer.
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