Lloyds have cornered me

xstream2000

I have always run a lloyds current account in a authorised overdraft facility. I know this isn't the best way to save money but this is the position I have been in for the last couple of years whilst starting and trying to grow my business. I opperate anywhere between £2500 and £4500 into a £5000 authorised overdraft. My usual monthly charges for this facility with the interest is around £6 Charge and £66 interest. So its costing me £72 a month....

As of the first of November I have been being charged £6.50 to £6.89 a day for being in my authorised overdraft. I called the bank and they informed me that it was the new way they calculate overdraft fees as of the 1st of November and that I would of had a letter. This basically now means I will be paying in excess of £200 a month to use my overdraft as I always have done.

The "customer service representative" passed me through to a sales team who offered me the option (Only option) to take out a loan for the value of £5000 to consolidate the overdraft. I admit this course of action will cost me less than the new charges and of course will give me a way out of the long term debt however, the monthly charge will still be just over the £100 mark meaning I will still be paying more monthly impacting on my monthly financial position. I will also incur more debt in the fact that the loan will load an additional £3200 worth of interest over the term, meaning from my current position of £4700 worth of debt I will be £8000 worth of debt. I really don't know how they can just change a policy and charge me over three times the amount of interest when I have always conformed to the allowed limits, its not Unauthorised overdraft fees but it feels I am now going to pay for those that don't manage their money according to policy.

Is there anything I can do or do I just take the loan

[Deleted User]

Take the loan.

They've offered you a good way out of the overdraft and it's a much more suitable product for long term borrowing.

StopIt

You can look elsewhere for a loan, apply for a money transfer credit card or open an account with a new bank and apply for an overdraft there. But yes, this has been on the cards for a while. See here for more details and more options:
https://www.moneysavingexpert.com/news/banking/2017/11/halifax-and-lloyds-overdraft-changes---the-winners-and-losers
An overdraft is never designed to really be a facility to be in for years on end, although many end up there and the new Lloyds charges are a double edged sword. lower charges for low overdrafts, and high chargers for bigger ones.


Is this a personal overdraft for a business purpose? Have you got a business account? As the business OD rate is much different: http://www.lloydsbank.com/business/retail-business/loans-and-financing/loans/business-overdraft.asp

robber2

Pay off the overdraft with a loan then cancel the faciltiy (or reduce it to say £200) otherwise in a year or so you will find yourself with a loan to pay off PLUS an expensive £5,000 overdraft.

Rob

TonyMMM

xstream2000 wrote: »

I will also incur more debt in the fact that the loan will load an additional £3200 worth of interest over the term, meaning from my current position of £4700 worth of debt I will be £8000 worth of debt.

You will pay a lot more than that if you keep the debt in the overdraft

PeacefulWaters

Take the loan.

Manage your money tightly.

Never go overdrawn again.

Blackbeard_of_Perranporth

If you’re using this facility in your business I would take a serious look at your bottom line!

PixelPound

If you are constantly in O/D then it could be argued you are not managing your money

If the £5000 loan is being repaid back at just over £100pm then it sounds like a 60 month loan. On you old overdraft, paying £72pm in fees and interest, you would pay £4320 over five years in fees and interest, and still owe the £4700.
So even if they allowed you to continue your overdraft at your old rate, you would be £1120 better off by taking the loan.

Just to reiterate - You are saying the loan would mean £8000 worth of debt, well if they let you continue your old overdraft as you wanted it would be £9120 worth of debt with the added problem of still having £4700 of that debt owing after 5 years and being no better off, where as the loan would mean been debt free (it terms of just this debt and not others you have).

You are currently paying £72 per month to service your debt and not getting anywhere. The just over £100pm would mean this debt would be gone in 5 years.

Richey_

^^ is a good response from Nic_c ^^

Bottom line is it’s their money and you have agreed when you borrowed it they can change the terms and conditions at any time. If I was you, you can either take the loan or take your business elsewhere. Only two real options. Also read your post, I am a halifax customer and they have been writing to me for months about these changes. Halifax and Lloyd’s are the same bank group and have introduced the same changes to overdrafts.