Lloyds Bank - The Poorer Pay more for an Overdraft ?

Saver101101

I might be reading this wrong, but if not I don’t think it’s fair.

Lloyds Standard current accounts have an overdraft interest rate of 39.9%

Lloyds Private Banking Current Accounts have an overdraft interest rate of (From their Web Site cost calculator):

 ·         Arranged overdraft rate 14.90% EAR

·         There is no interest charged if we allow you to go in to an unarranged overdraft

·         Interest free amount £600

·         No monthly or daily usage fees

 So those accounts have a permanent fixed first £600 free (I know some banks have allowed so much free with the current covid19, but this is permanent).

 Just doesn’t seem fair, and comes across that the poorer get punished more ?.

Thrugelmir

I'm sure that you are omitting important information such as the account fee charges. Making direct comparison somewhat meaningless. 

Saver101101

There are no account fees:

• A Relationship Associate to help you manage your day-to-day banking needs.
• Exclusive access to offers on other eligible Lloyds Bank products.
• A personal overdraft option available from day one*.
• Private Banking Debit Card.
• Variable credit interest of 1.00% AER (0.99% annual gross) on balances from £1 up to and including £3,999.99, and 2.00% AER (1.98% annual gross) on any part of the balance from £4,000 up to and including £5,000.
• Automatic refund of £3 monthly Club Lloyds maintaining the account fee for Private Banking clients.
• Access to internet banking and mobile apps and a Private Banking Service Centre for convenient day-to-day transactional banking.
• One of the three Lifestyle Benefits every year - a Gourmet Society dining membership, a choice of magazine subscription or six cinema tickets.

From the account leaflet:

• Maintaining the Account: No fee

Thrugelmir

What's the requirement for opening an account? 

Socajam

The banks were taken to the cleaners during the PPI claims and if anyone thought that they were going to sit back and give FREE overdrafts etc, then I have a pig that can fly to sell.
This is going to be the new banking from now on.
In fact, things are going to be different post Corona virus, so we better buckle up and get ready for what is to come.

onlyfoolsandparking

Thrugelmir said:

What's the requirement for opening an account? 

£250k in savings or investments with Lloyds OR a £750K mortgage plus investments from what I can gather reading about it for 30 seconds!. Open to everyone then LOL.

eskbanker

Seems like a complete non-story to me - the financial services industry is littered with similar examples of preferential benefits for those with more money, such as tiered interest rates (Lloyds and others), lower charges for larger investment accounts (HL and others), interest paid on accounts with minimum monthly funding (numerous), better accounts available to those with higher incomes (HSBC, etc), better mortgage rates for those with larger deposits, 0% credit cards for those with decent credit histories, etc, etc.

And it's certainly not limited to financial services - airline frequent flyer schemes obviously benefit higher spenders, as do supermarket and other loyalty schemes, and so on, welcome to the real 'unfair' world....

callum9999

Saver101101 said:

I might be reading this wrong, but if not I don’t think it’s fair.

Lloyds Standard current accounts have an overdraft interest rate of 39.9%

Lloyds Private Banking Current Accounts have an overdraft interest rate of (From their Web Site cost calculator):

 ·         Arranged overdraft rate 14.90% EAR

·         There is no interest charged if we allow you to go in to an unarranged overdraft

·         Interest free amount £600

·         No monthly or daily usage fees

 So those accounts have a permanent fixed first £600 free (I know some banks have allowed so much free with the current covid19, but this is permanent).

 Just doesn’t seem fair, and comes across that the poorer get punished more ?.

You cannot be serious? You are genuinely shocked that Lloyds offer more favourable terms to customers who keep a quarter of a million pounds in their account?

And no, giving someone something you can't get isn't a punishment for you, it's an incentive to them. 

williamstewart

Had a quick look at what I'm being charged daily for my overdraft and it was £1.41 yesterday (about £850 into my overdraft).
Today £0.60, so either they're taking into account a free £300? buffer, and/or the new rates are in fact benefiting me, even at 49%.

nick74

williamstewart said:

Had a quick look at what I'm being charged daily for my overdraft and it was £1.41 yesterday (about £850 into my overdraft).
Today £0.60, so either they're taking into account a free £300? buffer, and/or the new rates are in fact benefiting me, even at 49%.

The £300 interest free buffer came into effect yesterday (6th April) so that is quite likely the main reason for the reduction.

TripleH

Banks have to manage their cash-flow (including having funds to cover those in overdraft). They offer incentives to those who lodge large sums of money with them AND who keep that money with them. It may surprise some but banks also technically have their own 'overdrafts' and borrow from other banks to ensure they have enough available to pay out when we as consumers need to pay our bills.
I'm not supporting banks or attacking them merely making comments on how they operate (partly from own experience).