Overdraft APR Calulation

stu007

Hi.

Just had my bank statement from Lloyds.

I've been charged a £5 fee for using a pre-arranged overdraft.

I went overdrawn £37 for 1 day so have incurred a £5 fee.

I'm going to right a letter complaining that this is a ridiculous charge, but first I want to work out what APR this equates to.

So £37 borrowed for 1 day, £42 paid back.....any ideas?

noh

Why do you think this is a ridiculous charge?
Surely you expected to pay it when you decided to go overdrawn, it is published by them in their schedule of fees and charges.
http://www.lloydstsb.com/media/lloydstsb2004/pdfs/banking_charges_brochure.pdf

stu007

It ridiculous as to my rough maths its equivalent to 5000% APR, where as they pay me 0.1% on my balance.

opinions4u

Rather than fannying about with letters and meaningless calculations to come up with a big number that will impress nobody, why not ring them and apologetically ask them to reimburse the change.

At the end of the day it's a valid charge for going overdrawn. You've agreed to it by holding an account with them.

stu007

Its hardly fannying about, to work out what the real cost of the £5 fee is. I've not set Lloyds charges so if it comes to a big APR thats not my fault.

It was an error on my part not to read the terms of the overdraft properly, I naively assumed it would be charged at a fair % such that a small dip into it for a day would only result in a equally small charge.

noh

As you say it is an error on your part.
The best course of action is to plead ignorance and maybe they will refund the fee as a gesture of goodwill.

talana

stu007 wrote: »

Its hardly fannying about, to work out what the real cost of the £5 fee is. I've not set Lloyds charges so if it comes to a big APR thats not my fault.

It's a set fee, not interest. Therefore whatever number you come up with is both pointless and meaningless.

It was an error on my part not to read the terms of the overdraft properly, I naively assumed it would be charged at a fair % such that a small dip into it for a day would only result in a equally small charge.

As above, % doesn't come into it.
You'll write them a letter, and they'll shrug their shoulders and lob it in the bin.

opinions4u

stu007 wrote: »

Its hardly fannying about, to work out what the real cost of the £5 fee is. I've not set Lloyds charges so if it comes to a big APR thats not my fault.

No, but it is pointless. It is meaningless.

The fee is what it is. As published.

Overdrafts don't have an APR. It's an EAR. That specifically excludes any fees.

It was an error on my part not to read the terms of the overdraft properly

Well here's a link to their website. The bit that helps is:

A monthly overdraft usage fee of £5 applies.

I naively assumed it would be charged at a fair % such that a small dip into it for a day would only result in a equally small charge.

Foolish assumption.

It's your fault.

stu007

talana wrote: »

You'll write them a letter, and they'll shrug their shoulders and lob it in the bin.

And I'll shrug my shoulders and move the account elsewhere.

talana

stu007 wrote: »

And I'll shrug my shoulders and move the account elsewhere.

That's your right. They won't care
Just make sure you read the terms and fees schedule before opening a new account.

meer53

stu007 wrote: »

And I'll shrug my shoulders and move the account elsewhere.

Lesson learned eh ?