LBG change overdraft charging structure

Westie983

Dobbibill wrote: »

Use their overdraft calculator on their website.

You need to select the correct account, in your case the URCA.
This pops open additional area to enter the amount you plan to use and the length of time.

Play with the figures and see how it will impact you.

Interest calculaton with customers with URCA"s is that the fee will be calculated at -£300.01.

Overdraft of £2000 - £300 = £1700/£7=242*0.01=£2.42*31=£75.02
(total - fee free) (amount charged per day) (Total fees for month)

so you will not see the daily fee till you are -£300.01.

Westie983

YorkshireBoy

Westie983 wrote: »

Overdraft of £2000 - £300 = £1700/£7=242*0.01=£2.42*31=£75.02
(total - fee free) (amount charged per day) (Total fees for month)

The correct answer is £76.76 due, of course, to daily compounding.

KJSmith

Westie983 wrote: »

Interest calculaton with customers with URCA"s is that the fee will be calculated at -£300.01.

...

so you will not see the daily fee till you are -£300.01.

And the correct answer to when overdraft fees apply is not actually until -£307.

jonesMUFCforever

Westie983 wrote: »

Interest calculaton with customers with URCA"s is that the fee will be calculated at -£300.01.

Overdraft of £2000 - £300 = £1700/£7=242*0.01=£2.42*31=£75.02
(total - fee free) (amount charged per day) (Total fees for month)

so you will not see the daily fee till you are -£300.01.

Westie983

.........But who has a constant balance on their current accounts?
Most who use overdrafts get paid say once a month so account may go into credit for a few days then go overdrawn gradually over the month until next pay day etc?? It is impossible to say what the actual charge will be in advance.

Chrysalis

I am surprised this went on as long as it did, the small overdrafts were hideous value and subsidising those with large overdrafts.

Lloyds are rebalancing it although no doubt also making sure they make more money in the process.

I do agree of course that the slyness in the APR is dodgy tho.

wezzoid

If I've got the maths right, this interactive graph demonstrates the difference:
can't post links as I'm new!
Go to Desmos.com, an interactive graph thingy.
Put this on the end of the address: /calculator/xia4p5d1vo

Blue line is the old rate, in this case it's £1 per day flat rate
red is the new 1p per £7 per day.
a = borrowed amount, use the slider
x-axis is time in days, y-axis is total debt.
You can change the axes using the spanner button or just zoom in and out.

Basically, the new rules are much cheaper IF you just dip in and out of your overdraft. If you rely on it heavily it will be worse than before.

(This isn't perfect because it's using the natural growth exponent e which simulates infinite recalculations, not once per day. I'm sure some proper maths whizz can correct me)

merlin777

I use my overdraught like a flexible loan, usually to meet unexpected healthcare-related costs. I'll be in the group that are worse off. At the moment what costs me £90 per month will cost me a whopping 5x more. As far as I can see, if I have an overdraft of £100 the equivalent APR is 52% or 68% compounded.

The lack of transparency they shown on this is disgusting.

After 17 years I'll be swapping to another bank with reasonable OD fees for how I like to use my overdraft any recommendations gratefully received....

PeacefulWaters

merlin777 wrote: »

The lack of transparency they shown on this is disgusting.

Scandalous writing and telling you what they're doing, issuing press releases, creating web site software to help you understand the impact on you.

After 17 years I'll be swapping to another bank with reasonable OD fees for how I like to use my overdraft any recommendations gratefully received....

There are far cheaper forms of borrowing than an overdraft with just about every bank.

merlin777

I appreciate both your points, Peacefulwaters.

I didn't say they hadn't publicised it but they have been choosey about how they've dressed it up. It's pretty common these days to present an equivalent APR and they've chosen not to do so. Wonder why?

Yes there are cheaper ways to borrow but few are more flexible, allowing you to dip in and out with variable amounts. Combine that with the fact that my current charges are around 10% apr equivalent, although credit cards are very flexible its very hard work to make them cheaper. This is a setup I've been using for 17 years and I don't appreciate it being pulled whilst trying to pretend to me it will be better for me (even during the CS calls today).

Don't over-defend them. At the end of the day they wouldn't be doing this if it didn't make them more money.

Chrysalis

merlin777 wrote: »

I use my overdraught like a flexible loan, usually to meet unexpected healthcare-related costs. I'll be in the group that are worse off. At the moment what costs me £90 per month will cost me a whopping 5x more. As far as I can see, if I have an overdraft of £100 the equivalent APR is 52% or 68% compounded.

The lack of transparency they shown on this is disgusting.

After 17 years I'll be swapping to another bank with reasonable OD fees for how I like to use my overdraft any recommendations gratefully received....

see if you can get a 0% purchases or money transfer card.

I think even a normal credit card would be better value in fact.