Bank of Scotland Overdraft Charges changes

Davef68

Just got notification of further changes in arranged overdraft charges from BOS (presumably apply to Lloyds and Halifax too)


1p per £6 overdrawn up to £1250
1p for £7 from £1250 to £2500
1p for every £8 over £2500


(Currently 1p per £7 for all)


Seems strange charging more for smaller amounts. Thankfully doesn't affect us as we only use this account to service the mortgage and a few other DDs



https://www.bankofscotland.co.uk/bankaccounts/overdraft-assessment/the-new-overdraft-fees.asp

pinkdalek

So is it more cost effective to be £1257 overdrawn than £1250?

They changed their overdraft charges last year to make it "simpler" now if anything they've made it even more complicated and are trying to make more money out of those who use smaller overdrafts.

eskbanker

pinkdalek wrote: »

So is it more cost effective to be £1257 overdrawn than £1250?

Depends how you measure cost effectiveness but if you mean 'is it cheaper' then no, it isn't (in absolute terms) - going from £1250 to £1257 incurs an extra penny per day.

The first £1250 is always charged at 1p per £6 even if the overdraft exceeds that, as per the examples given at the above link.

pinkdalek

What I meant was if you were £1250 you are being charged around £2 - £2.10 per day
If you were £1257 you would be charged £1.79 a day.

The best solution is not to have an overdraft in the first place, easier said than done...

boo_star

pinkdalek wrote: »

What I meant was if you were £1250 you are being charged around £2 - £2.10 per day
If you were £1257 you would be charged £1.79 a day.

The best solution is not to have an overdraft in the first place, easier said than done...

Yes but that's not how it works.

As eskbanker has explained when you move from one "bracket" to another you don't pay the new rate on the entire amount, only on the amount of borrowing that's in the new bracket. So someone borrowing £1257 would pay a penny more per day than someone borrowing £1250 as they'd pay the same on the first £1250 plus a penny per day on the £7 that's above it.

There's no scenario where someone borrowing more will pay less.

eskbanker

I thought that referring to the examples at the link provided would allow people to understand, but for anyone still having difficulty getting to grips with the tiered fee structure they include the following simple explanatory graphic: