Lloyds change OD fees

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Lloyds TSB is planning a bank charges shake-up this winter which could see those overdrawn pay £60 a year more.
However, customers who slip into an unauthorised overdraft could be hundreds of pounds a year better off following pressure from the bank charges reclaiming movement, spearheaded by consumer groups such as MoneySavingExpert.com (see the Best Bank Accounts guide).

New authorised overdraft fee
The Lloyds TSB plans, which come into force on 2 December, will see those within what the bank calls a "planned" overdraft pay a new £5 per month 'overdraft usage fee' in addition to the interest they currently pay.
If overdrawn throughout the year, that's a £60 charge.
On the classic account that currently charges 19.3% annual interest, someone constantly overdrawn by £1,000 will pay £253 in annual fees compared to £193 now.

However, you won't be charged if less than £10 overdrawn as the bank will introduce a buffer.
And anyone with an interest-free or fee-free account won't pay a fee as long as they stay within their agreed no-charge limit.
Lloyds-owned Halifax faced a backlash last year after hiking charges for those who go overdrawn to £1 a day (which could equate to £365 a year), regardless of their balance, which hits those who slip over the hardest (see the Halifax anger MSE News story).

Lower unauthorised overdraft fees
While authorised overdraft charges are rising, if you slip into what the bank calls an "unplanned overdraft" you'll pay less from 2 December.
There are a raft of changes, including:

• The £15 monthly fee for being in an unauthorised overdraft will fall to £5 (though this will only be charged once regardless of whether your overdraft is authorised or unauthorised).
• The £20 fee for a rejected transaction will fall to £10.
• Daily fees for sitting in an unauthorised overdraft will drop from up to £20 to up to £10. The level of the charge depends how far into the red you are, though anyone more than £100 overdrawn will pay the full charge (£20 now or £10 from December).
• Under the new rules, you can only get eight daily fees per month, compared to the current 10.
• You won't get any "unplanned" fees if just £10 over your limit due to a new buffer.

Anyone £200 over their limit for ten days a month with three declined transactions in that period will pay £115 in fees during that month under the new regime compared to £275 now.

This is still a hefty amount so ensure you do a full Budget and a Money Makeover if close to the edge.
Banks and building societies have hammered those who breach their overdraft limit over recent years with sky-high charges of up to £39 a pop, though the coalition Government has pledged to introduce measures to curb "unfair" charges (see the Bank Charges Reclaiming and the Bank Charges Pledge MSE News story).


Lloyds TSB in bank charges shake-up - MoneySavingExpert News

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Re: Lloyds change OD fees

Link to BBC article on same issue:

http://news.bbc.co.uk/1/hi/business/10395458.stm

• the £15 a month fee for running an unplanned overdraft will be cut to £5. It will be payable for using either an authorised or unauthorised overdraft.
• the £20 fee for bouncing a cheque or electronic payment will be cut to £10, with a continued maximum of three such fees per day.
• customers who slip into the red by up to £10 will not have to pay any charges - a "buffer zone"
• daily fees for being overdrawn will be reduced from between £6 and £20 to between £5 and £10
• the maximum number of such daily fees that will be imposed is going down from 10 a month to 8.

The consumers' association Which? said that, despite the cuts, it would still be very expensive for LLoyds TSB customers who went into the red without permission.

"You can still pay £40 a day for up to eight days a month," said Vera Cottrell of Which?.

"The fees are still very, very high, and customers with authorised overdrafts will now have to pay £5 where they did not before."