Lloyds Yearly Overdraft Charge

plutolady

Is it normal for banks to charge a yearly "Arrangement Fee" for
a business overdraft facility? When all they do is just let you continue to
have the facility? Mine is £100! I understood the first time I arranged it
- paperwork, checks etc., but every year?

Mark7799

Overdrafts are usually given with a review date - often this is annually to make sure the usage on your account justifies the overdraft facility marked.

miss_phish

Oooh, I recently had a right old rant at my Lloyds manager for this fee. Didn't make any difference in my case sadly as he didn't reduce it but I think it's appallingly high (especially as I havent even used the thing for over a year!)

Have a go at trying to reduce it & let us know how you get on!

dunstonh

Yes it is normal. Banks treat businesses as businesses funnily enough and act like a service provider and charge you for services used.

As a business, I am sure you charge people for your service.

jonesMUFCforever

Two things I would like to say to Plutolady - if you don't need an overdraft then ask bank to cancel the facility - job done you have saved yourself £100.
Secondly as a legitimate business expense the fee is tax deductable.

plutolady

Yes they do charge me for my overdraft in the interest charges they levy.
So why another charge for a so called review which costs them nothing?
I understand an arrangement fee at the start of an overdraft or if it actually took man hours to process this is just another way of getting fees.
If I send money between LLoyds accounts they also deduct the money from one account at the end of one business day use it overnight but do not put it into the other account until the following business day.

dunstonh

So why another charge for a so called review which costs them nothing?

It doesnt cost them nothing. The expiry of the overdraft appears on a report and a manager will review that report and make a decision on whether to extend it again or not. That will involve taking a look at the turnover on your account as well as a the activity.

If I send money between LLoyds accounts they also deduct the money from one account at the end of one business day use it overnight but do not put it into the other account until the following business day.

That is not correct. It's same day on personal accounts and same day between business and personal but the transaction on both doesnt happen until next working day. You are debited and credited at the same time.

Perhaps you should complain that you earn interest on cheques you pay in to your account from day 1 and not day 3 or that you earn interest on cheques you write out until they debited.

You have a business account so that suggests you are self employed. That should give you a better understanding that time costs money and things you do have to be paid for. How would you like it if all your customers said they dont want to pay for your services because your charges were too high? Do you only charge people enough to cover the costs or do you build in a profit margin as well?