Lloyds Classic Plus 6% - is your interest correct this month?

Dagobert

There have been so many problems with in-credit interest. Has anyone experienced any problems with their overdraft interest calculations?

I had the following transactions and balances in February and was charged 23p o/d on 2nd March. I can't see what for. At no point was my end of day balance overdrawn.

date transaction balance
03/02/2009 188.36
05/02/2009 -£100.00 £88.36
11/02/2009 £1,000.00 £1,088.36
12/02/2009 -£86.36 £1,002.00
17/02/2009 -£1,000.00 £2.00
19/02/2009 £0.37 £2.37
23/02/2009 -£25.00 -£22.63
23/02/2009 £24.63 £2.00
27/02/2009 £2,498.99 £2,500.99

Milarky

The only thing that would normally trigger a charge is where a debit takes place before a cheque deposit has cleared (i.e. either the date of deposit or the next day - ignoring weekends)

Looking at your statement however, there's no point at which you do that...

Dagobert

Thank you for the sanity check, Milarky.

I don't think I can face another clueless advisor. Two months ago, I phoned TSB regarding an incorrect tax certificate, which I have been chasing without success since October. They simply don't seem to respond to letters.

Who is it best to write to?

rb10

If I remember correctly, I think that Lloyds do their balance check at 3.30pm (??). So if the £25.00 debit on 23rd Feb was before 3.30, and the £24.63 debit on the same day after 3.30pm, this would have left you overdrawn for one day.

However, unless your o/d rate is about 370% (unlikely!) then this would only account for about 1p of the 23p!

AP

Dagobert wrote: »

There have been so many problems with in-credit interest. Has anyone experienced any problems with their overdraft interest calculations?

I had the following transactions and balances in February and was charged 23p o/d on 2nd March. I can't see what for. At no point was my end of day balance overdrawn.

date transaction balance

03/02/2009 188.36

05/02/2009 -£100.00 £88.36

11/02/2009 £1,000.00 £1,088.36

12/02/2009 -£86.36 £1,002.00

17/02/2009 -£1,000.00 £2.00

19/02/2009 £0.37 £2.37

23/02/2009 -£25.00 -£22.63

23/02/2009 £24.63 £2.00

27/02/2009 £2,498.99 £2,500.99

I take that the credits on 03/02/09 for £188.36 and 23/02/09 for £24.63 are both cheques. They take 4 banking days to be treated as 'clear' - i.e. paid in on Monday, available on Friday; paid in on Thursday, available on Wednesday next. If any amount of the cheque is drawn before the 'clear' date, you will then be drawing on unclear balances resulting in overdraft interest.

The credit for £188.36 paid in on Tue 03/02/09 was not treated as clear until Monday 09/02/09. So withdrawing £100 on Thur 05/02/09 has resulted in 4 days' overdraft interest on £100.

Similarly, the credit for £24.63 paid in on Mon 23/02/09 was not treated as clear until Friday 27/02/09. So withdrawing £25 on the same day has resulted in 4 days' overdraft interest on £22.63.

The overdraft interest rate on Classic Plus account is 1.45% per month (30 days). Your overdraft interest can be calculated as follows:-

£100 x 0.0145/30 x 4 = £0.19;
+
£22.63 x 0.0145/30 x 4 = £0.04

Total = £0.19 + £0.04 = £0.23

rb10

AP wrote: »

I take that the credits on 03/02/09 for £188.36 and 23/02/09 for £24.63 are both cheques. They take 4 banking days to be treated as 'clear' - i.e. paid in on Monday, available on Friday; paid in on Thursday, available on Wednesday next. If any amount of the cheque is drawn before the 'clear' date, you will then be drawing on unclear balances resulting in overdraft interest.

I think the £188.36 is the opening balance for the month, as it's in bold. so the £0.19 bit above would not apply.

Also, according to the Classic Account leaflet,

We are the only UK high street bank to give you instant interest on your cheques.**

** Applies to cheques paid over counters 9am-4.30pm weekdays, to a maximum value of £1,000. Only applies to Lloyds TSB personal current accounts paying interest.

So if they were cheques paid in, then they should be used in the overdraft interest calculation from the day they were paid in.

Milarky

rb10 wrote: »

So if they were cheques paid in, then they should be used in the overdraft interest calculation from the day they were paid in.

I didn't think so at first, but you must have a point there.

The 'standard' cycle used by all banks is the so-called '2-4-6' cycle, where '2' indicates that in-credit interest starts to be earned from the 2 days after deposit AND the in-credit value offsets (up to the amount of one's overdraft limit) any withdrawals on that date - even though the cheque is not 'cleared' for another 2 days - meaning that you are drawing against an uncleared item and reducing the available overdraft accordingly.

Now if Lloyds does pay in-credit interest from day 'one' this also implies that any use of the overdraft on that date is offset up to the value of the cheque also - meaning no debit interest is charged where the in-credit interest is given up by (e.g.) drawing £100 against a £100 cheque, previous nil balance and an overdraft g.t. £100....

...but I have never asked Lloyds about this difference (if it exists)

Dagobert

I am amazed I sparked such a long discussion. Thank you for all your input!

rb10 wrote: »

If I remember correctly, I think that Lloyds do their balance check at 3.30pm (??).

I believe their cut-off point is 17:30.
In any case, the transaction date on the statement is significant. If a Faster pay-in misses the deadline it will show up with next day's date.

AP wrote:

take that the credits on 03/02/09 for £188.36 and 23/02/09 for £24.63 are both cheques.

No: £188.36 was the opening balance; no cheque payments at all.

rb10 wrote:

So if they were cheques paid in, then they should be used in the overdraft interest calculation from the day they were paid in.

Milarky wrote:

Now if Lloyds does pay in-credit interest from day 'one' this also implies that any use of the overdraft on that date is offset up to the value of the cheque also

Cheques up to £1000 per day start accruing in-credit interest from day one but I would assume they don't add to the available balance until cleared.


However, none of us picked up the key point: While in-credit interest relates to the month just past, o/d interest refers to the previous month - in this case January.

In January, I went £245 overdrawn for 3 days.

AP

Thanks - you learn something every day!

Dagobert

According to Lloyds TSB Current Account Rates, the interest rate appears not to have been changed since 2/1/2009, which leaves us at:

Classic Plus rate: 2.5% AER w.e.f. 2/1/2009.
Presumably, the 2% bonus takes it to 4.5% AER = 4.4% gross.