LBG change overdraft charging structure

Vortigern

Westie983 wrote: »

... you can only spend whats in your account plus £7 you will no longer *from Nov be able to go overdrawn for more then £7.

What if my account is empty and I make a contactless payment of up to £30. Assuming this is an offline transaction, I could go more than £7 overdrawn.

I could make several further contactless, offline payments.

This not something I would try as there would be little benefit in such a small free overdraft.

On the whole, I think the proposed changes should help those who can't control their spending to keep within their budgets.

Westie983

Vortigern wrote: »

What if my account is empty and I make a contactless payment of up to £30. Assuming this is an offline transaction, I could go more than £7 overdrawn.

I could make several further contactless, offline payments.

This not something I would try as there would be little benefit in such a small free overdraft.

On the whole, I think the proposed changes should help those who can't control their spending to keep within their budgets.

At the moment the proposed information given is that the contactless payment will not go through, but it may work with petrol as they only authorise £1, so its still up in the air, but the training launched today says that payments will be declined if you are taken over your agreed overdraft.

Westie983

One-Eye

a) In October I have an arranged overdraft limit of £500 but an overdraft of £1000. What happens in November?

b) In October I have an arranged overdraft limit of £1000 and an overdraft of £1000. Please can I have my arranged overdraft limit reduced to £7 in November?

GingerFurball_2

Westie983 wrote: »

It will be changing to 2:30 from 3:30, after that payments will bounce.

Fee structure will be calculated as of the balance at 2:30 each day.

Wait for the letter to arrive 2nd August for more information.

Westie983

No it won't. You'll still have until the end of the day to clear any overdrawn balance.

The 3:30 (changing to 2:30) cut off is to ensure Direct Debits and cheques that debit the account are honoured.

Dobbibill

One-Eye wrote: »

a) In October I have an arranged overdraft limit of £500 but an overdraft of £1000. What happens in November?

My understanding is you will be charged on the existing structure for October and new structure for November so during November there will be an overlap period where you are being charged for both.

b) In October I have an arranged overdraft limit of £1000 and an overdraft of £1000. Please can I have my arranged overdraft limit reduced to £7 in November?

You can only reduce your overdraft limit if you are in credit to the amount you want to reduce it by.
Anything over £7 will decline unless it is below the merchants floor limit, where they don't contact the bank for authorisation or contactless but you will not be charged for more than the arranged overdraft of £7.

Chip & PIN can kick in randomly for contactless for security checks, this will cause it to be declined - it will then only work once you have sufficient funds.

Chrysalis

Personally I like the changes

Basically as is now there is a fixed fee and interest on authorised overdrafts, in my case I have a £200 overdraft limit (which I dont use), but if I used it the fixed fee would make it a very expensive way of borrowing money, before the MSE court case the authorised overdraft was a very cheap way of borrowing money. So in other words the MSE court case made things worse for lloyds authorised overdrafts.

So now is a fixed fee and interest charged daily.

The new system will remove the fee, but increase the interest rate, those like me with a low limit will find it cheaper to use, but those with larger limits will find it more expensive, which is how I think it should be. So an improvement, but a warning to those who will lose out from this change.

dave88861

To borrow over £226 a month via overdraft s more expensive.

The new rate works out at 52% not 19.85% + a £6 fee

£1000 over a month is £42 instead of £22

On a sliding scale the cut-off for being better off is owing less than £226

This is I thought illegal borrowing as the interest rate, as a % is not shown.
The old scheme was easier to calculate, in your head, say £500 for the month,
was roughly 20%/12 plus £6 = 500 x .2 = 100 / 12 = 8 + 6 = £14
now it's 500 / 7 = 70 x 1p = 70p x 30 = £21
a 50% increase.

This new scheme is deceptive and should show the interest rate of 52%
Is it illegal not to show interest rates for loans?

the true cost of the credit, called the Annual Percentage Rate (APR)

jimarnold_2

I have a prearranged overdraft limit of £950 which I've only used twice in 40 years - probably why they gave it to me
From my letter it looks like the new rate will be more (if I ever use it)

I say looks like because Lloyd's helpfully give me an example which includes an APR for the old system but not one for the new one

I also thought APR was supposed to be shown to make comparison easier?

tifo

Lloyds are a bit confusing with the info.

Currently, there is not really an unarranged overdraft for most customers as they, like many other banks, will return the direct debit or standing order unpaid and charge you £10 for it. So in this case you cannot get charged 1p for every £7 overdrawn because you're not overdrawn.

Its possible to go overdrawn with contactless payments or those that are not preauthorised but there's very few of these, banks will not authorise unattended petrol station pumps if there's not 'enough' money in the account, but they take the payment out about 3 days after it is made when you had the funds. What is 'enough' i don't know because i've had my bank not authorise the petrol pump even when my account balance was more than what I was going to fill up with. I've then immediately transferred within the mobile app and they did authorise.

It will be that only those with a planned overdraft will pay 1p for every £7 overdrawn. For many with an agreed overdraft (they say £700) this will cost the same as what it does at the moment with the £6 fee and interest. So no change there except you'll have to pay pennies every day.

In terms of the time to pay into the account for a payment that will be returned, at the moment its 3.30pm for the first check and midnight for the second check and after this they will return it unpaid. They even tell you this in the letter they send for the £10 charge. I had a 'polite' discussion with my local manager about this because I paid cash into the account at 3.40pm after standing in the queue and he said it will be returned unpaid (it was busy and he helped out at the cashier), i said "no you're wrong" but he didn't agree. It was paid anyway but next time I went into the branch I took a copy of the letter they'd sent me previously and he said "hmmm i didn't know that" ....

Its changing to 2.30pm for the first check from October but don't know about the second check.

miller

I currently have an arranged overdraft which I don't use. I think I'll be better off cancelling it as it would be preferrable not to be charged anything and just letting payments bounce when the balance hits 0.

As a Halifax customer, currently Travelex foreign cash purchases (e.g. for airport collection) do not incur a charge. This appears to be changing.