LloydsTSB and the £5 planned overdraft fee

bushbrother

All,

Last night I got home to find a nice letter from LloydsTSB about the new changes to charges on my current account. I was unaware of these impending changes until I read this letter. I was quite shocked to see that I will now be charged £5 every time I step more than £10 into my PLANNED overdraft + usual interest rate.

Now I am perfectly happy to pay the interest on my overdraft, but why this extra charge? I tend to go into my overdraft every month bby more than £10, if just for a couple of days, this is mostly due to how my DD are taken out and when my wages come in. I NEVER go into any unplanned overdraft.

The letter states they are saving people money by cutting the fees for UNPLANNED for 70% of users, but I have a funny feeling this only represents 5-10% of their customer base as most will have a PLANNED overdraft. So basically I will be funding the drop in charges elsewhere. Not to mention the fact they are also removing the interest on the current account too, even if it is tiny ...

I called their phone line only to reach a very nervous, confused agent who seemed a bit shell shocked. He was also unaware that the phone line was redirecting when prompted to "press 1 if you have received your letter". The poor guy was totally unprepared and agreed that it was out of order, but there was no satisfactory answer he could give me ... that guy was in for a looooong shift!

After 15 years with LloydsTSB I am now actively looking for another current account unless they backtrack before the start in December. Is anyone else in the same boat? I am surprised there are not others who are shocked by this move? Surely heads will roll in LlloydsTSB when the customers begin to leave to other banks who don't charge for this? Or is this a sign of things to come market wide?

Advice / Help / Agreement welcome

bushbrother

I do agree, and ideally I would love not to go overdrawn and stop paying the bank anything, but sometimes this is just not possible.

The point I was trying to bring up is that these guys have been bailed out by us, then they make huge profits while claiming they are saving us money. Put in reality a few people are benefiting (a good thing anyway) but many many people are losing out.

I don't see how they can justify the £5 ON TOP of interest, this is the real point ...

Chadsman

I agree it is poor value but nobody is obliged to offer any product that is good value- Lloyds are exercizing their right to offer a cr*p product.
Vote with your feet!

missile

LTSB charges for overdraft are less than most and not as good as some, e.g. as a new customer, A+L gave me a free overdraft, but I found A+L (now Santander) service to be very poor.

Paul_Herring

bushbrother wrote: »

Now I am perfectly happy to pay the interest on my overdraft, but why this extra charge?

To subsidise the lower charges for those that seem to be continually in their overdraft or use unauthorised overdrafts.

The letter states they are saving people money by cutting the fees for UNPLANNED for 70% of users,

There you go - you have your answer

but I have a funny feeling this only represents 5-10% of their customer base as most will have a PLANNED overdraft. So basically I will be funding the drop in charges elsewhere.

And you even came to the right conclusion!

After 15 years with LloydsTSB I am now actively looking for another current account unless they backtrack before the start in December.

To be honest, you should have really have a second current account already which you use, if only for minor stuff once a week, for exactly this sort of situation.

Is anyone else in the same boat? I am surprised there are not others who are shocked by this move?

I first heard about this a month or so ago, and while not surprising, I did feel a little angry about it. But realistically, it won't affect me personally, since it's only rarely I go into the red (and usually only because I've miscalculated a bill or a date.)

Surely heads will roll in LlloydsTSB when the customers begin to leave to other banks who don't charge for this? Or is this a sign of things to come market wide?

Customer apathy and ignorance will result in only a few people leaving, and certainly not in sufficient numbers that it would cause many ripples in Head Office.

And most of the other banks are just as greedy with their charges - they just calculate them differently.

The best way to avoid this, if possible, is to generate your own "overdraft buffer" by subtracting that buffer from what you know the balance should be[1] in your account. So if you want a buffer of £100, and a balance of £245, treat your account as if you only had £145 in it.

[1] You should be calculating this yourself, do not rely on the 'total' on bank statements/mini-statements/website. Use the latter only for confirmation of your figure, not to generate it.

Vincenzo

I completely agree this change is not on, it will cost 'light users' dearly.

If you are likely to go into O/D every month, consider one of the AVA accounts. With my Platinum I get £250 interest free O/D and the fee will not apply to that part. I am sure people will disagree but I find the benefits of the account are worth the £17 per month fee, particularly as it is joint with my wife (e.g. x2 mobile phones covered). That coupled with the reduction in hassle of having to shop around every year for travel insurance, breakdown cover and mobile phone insurance has kept me with Lloyds despite the fact that many of their accounts are poor value. I rarely keep any savings with them for example.

izools

Just phoned Lloyds TSB -

The £5 a month charge applies once a month if you go into a planned overdraft and any further charges applied to an account that go more than £10 over an agreed limit can be waived upon request.

As I hold a Gold account with £100 interest free overdraft, the charge only applies to me if I go more than £100 overdrawn. My limit is £150, so I have requested they reduce this to £100 to save from every incurring charges.

All good

Paul_Herring

Vincenzo wrote: »

If you are likely to go into O/D every month, consider one of the AVA accounts. With my Platinum I get £250 interest free O/D and the fee will not apply to that part. I am sure people will disagree but I find the benefits of the account are worth the £17 per month fee

So, in order to avoid a potential £5 a month charge, you're reccommending an account that always charges £17 a month?

particularly as it is joint with my wife (e.g. x2 mobile phones covered).

Hmm. Mobile phone insurance.

That coupled with the reduction in hassle of having to shop around

Shopping around for.... what?

every year for travel insurance, breakdown cover and mobile phone insurance

If you feel that £204 per year is money well spent for those things, then all power to you.

As you say - "people will disagree." I spent £0 on mobile insurance, £50 on breakdown cover, and under £20 on travel insurance in the past year. All for about 15 minutes, total, looking around on the web. And that covers 2 people.

Vincenzo

Paul_Herring wrote: »

So, in order to avoid a potential £5 a month charge, you're reccommending an account that always charges £17 a month?

Hmm. Mobile phone insurance.

Shopping around for.... what?


If you feel that £204 per year is money well spent for those things, then all power to you.

As you say - "people will disagree." I spent £0 on mobile insurance, £50 on breakdown cover, and under £20 on travel insurance in the past year. All for about 15 minutes, total, looking around on the web. And that covers 2 people.

I suggested their AVA range be considered. There are a range of accounts with cheaper ones than the platinum. If the OP is going to be paying £5 per month most months for nothing, it may make sense.

I suspect your circumstances are different to ours. Do you have 2 iPhones that you carry around uninsured? Does your breakdown cover include homestart? (before you suggest it I prefer to use an actual breakdown recovery service than an insurance scheme). Does your annual travel insurance include family cover or winter sports cover?

I concede that I could probably make a saving on all these things by shopping around. I have done so previously but the saving was not worth the time and hassle involved and often the cover was not as comprehensive.

bushbrother

opinions4u wrote: »

The bailout is irrelevant to your otherwise reasonable point.

Fair enough I was just having a rant ...

I have voiced my opinions to LloydsTSB, I guess they will ignore and move on, which is now what I will do too. Maybe it is good that it forces me to re-evaluate my banking choice ... oh well! I still find it a bizarre move ...

missile

Vincenzo wrote: »

I That coupled with the reduction in hassle of having to shop around every year for travel insurance, .

I don't like the cover offered by AXA. I hope you are aware of the small print?

Travel accident cover only covers for holiays booked with LTSB credit / debit card
You must have three nights booked accomodation in UK, ie. you cannot claim in respect of a wekend away
They do not cover volcanic ash
They do not cover alternate travel if your flight is delayed / cancelled