Lloyds Banking Group has announced that it is revamping the overdraft charges for customers of Halifax, Bank of Scotland and Lloyds Bank with effect from November this year.
The banking giant has decided to ditch the £6 monthly overdraft charge for Lloyds Bank and Bank of Scotland customers and will no longer charge unauthorised overdraft fees for these two banks and customers of Halifax too.
Although the revised charges tariff for overdrafts is easier to understand it doesn’t mean it’s the best value account if you’re someone who dips into the red now and again, as the table at the bottom of this article shows.
The new overdraft tariff is quite different to anything else on the market as it will charge 1 pence per for every £7 of overdrawn balance per day – plus the charges will be debited to the account at the end of each day rather than as a lump sum a once a month – a move that should help customers with their budgeting.
Although 1p per £7 may sound a small amount, it actually equates to an equivalent interest rate of around 52% so it’s definitely worth shopping around to ensure you have the cheapest overdraft for the way you manage your bank account.
There is not one account that’s best for everybody – in fact the account which offers the best overdraft will depend on how much you need to borrow and for how long – if you’re not sure which account would be most suitable, this table should help.
The regulator, The Financial Conduct Authority has been focusing on the cost of short term credit, so son’t be surprised if other banks follow suit in the coming months.