Lloyds TSB cuts bank charges in overdraft overhaul

Bank charges to "halve" for 70% of customers

By Elliot Wright, 24th June 2010

Lloyds TSB is slashing its overdraft charges on current accounts in a move to make banking fairer and cheaper for its customers.

Customers who go overdrawn will now pay fees of between £5 and £10 instead of between £6 and £20 for each day they are in the red, and the maximum number of such daily fees that can be imposed in any one month has been reduced from 10 to eight.

No bank charges will be levied upon customers who go overdrawn by less than £10, giving them a "buffer zone".

The fee for bounced cheques and payments has been halved from £20 to £10, with a maximum of three such instances allowed per day.

The bank is also cutting the cost of running an overdraft, unauthorised or otherwise, from £15 a month to £5.

However, the bank has also decided to stop paying interest on its standard current accounts, which currently stands at a paltry 0.1%.

But the interest rate charged to overdrawn customers will remain the same, with no changes being made to the current rate of 19.3%.

The changes will come into effect on 2 December 2010 and are widely believed to be in response to calls from the government and consumer campaigners to put an end to "unfair" bank charges.

A Lloyds spokesman said: "All customers who use an unplanned overdraft facility will pay less under the new structure.

"Almost 70% of customers who use an unplanned overdraft will pay less than half what they currently pay."

But consumer group Which? said the changes do not go far enough, and customers in the red still potentially face shelling out hundreds of pounds a month in bank charges.

"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."

Claims Financial