Lloyds Bank to Overhaul Overdraft Charging Policies
July 18, 2017
The Lloyds Banking Group has announced details of an overhaul to its policies around current account overdrafts and the associated charges and fees.
Lloyds owns several of the UK’s leading high street banking operations, including the Bank of Scotland, and has millions of customers throughout the country.
The group has said that it will abolish fees for anyone who falls into an overdraft unexpectedly and without having planned to do so.
Describing its policy changes as a “simplification”, Lloyds says its new approach is based on giving customers a greater degree of clarity and control when it comes to using overdraft facilities.
The changes could be good news for the many thousands of people who bank with Lloyds while struggling to manage their personal finances and their outstanding debts.
When it comes to planned overdraft use, Lloyds says that from November it will only ever charge its customers at a flat rate of 1 pence per day for every £7 borrowed.
So anyone with a classic current account with Lloyds or Bank of Scotland will be charged at a rate of £1.40 for 10 days of being £100 overdrawn, rather than £6.38 as would currently be the case.
From November, there will be no charges for unplanned overdraft use and customers will be sent automated text messages informing them when their account balances are getting close to zero.
“This new approach is simple and clear, giving customers more control of their overdraft borrowing and how they manage their finances,” said Vim Maru, group director of customer products and marketing from the Lloyds Banking Group.
“When asked about our new approach, over 80 per cent of customers said that they preferred it compared to the current charging format.”
The debt help charity StepChange has backed the new approach to overdraft charging being introduced by Lloyds and welcomed the removal of charges for unplanned overdraft use.
“Around half our clients have struggled with overdraft debt so we are pleased to see a specific focus on helping borrowers with larger overdrafts to stay in control of their finances,” said Mike O’Connor, StepChange’s chief executive.
If you live anywhere in Scotland and you are finding it tough to cope with your personal debt problems then Scotland Debt Solutions can help. Contact your nearest office to find out more or to arrange a free consultation.