Lloyds, Halifax and Bank of Scotland to charge up to 49.9% interest on overdrafts from April - MSE

Glad to see Lloyds Group have finally broken cover on overdraft charges.

With their current overdraft charges equivalent to 84% pa.on the first £1,250 this announcement must be breaking their heart.

This lot are soooo greedy, they are likely to claw back the rest by reducing benefits on their accounts.

Kate73 wrote: »

Hello. I have just received the santander formal letter about overdraft fee changes..... I have an arranged overdraft so will be charged 39.9%. Whereas unarranged is 0%.
Shocked.
Should I change /get rid of my arranged overdraft?

While this thread is about Lloyds group rather than Santander (i.e. you should probably have started a new thread), you're not the first to conclude from these industry changes that an arranged overdraft is now worse than an unarranged one, but the obvious difference is that your bank will allow you access to funds that'll take you up to your arranged limit, but they're under no obligation to honour transactions that would take you overdrawn if you don't have an arranged facility.

Nationwide have explicitly said that (where possible) they'll decline transactions to prevent customers from going overdrawn without an arrangement, but it remains to be seen whether others will adopt a similar approach.

Also worth noting that whatever Santander's position on overdrafts is, it can't be as simple as 39.9% interest for arranged and 0% interest for unarranged, because the whole point of the exercise is to harmonise interest rates so they're the same for both, even though other Ts & Cs may allow variation of total cost, such as capping.

Consumerist wrote: »

Glad to see Lloyds Group have finally broken cover on overdraft charges.

With their current overdraft charges equivalent to 84% pa.on the first £1,250 this announcement must be breaking their heart.

This lot are soooo greedy, they are likely to claw back the rest by reducing benefits on their accounts.

Don't really see it this way. They are allowing folk access to money (their overdraft) they don't have and potentially never will have at a rate that should put them off going into their overdraft.

eskbanker wrote: »

I don't think these posts are actually contradictory - yes, overdrafts are ultimately loans that need to be paid for but LBG's pricing policy in recent years has been more aggressive than most and they've chosen to retain that position in the new model.

It could certainly be argued that their pricing is predatory (albeit less so than the current structure) and I'm not convinced that it's tenable to represent it as if it was deliberately a deterrent....

Yes, they have been more aggressive as you say, but when it comes to current accounts (especially nowadays) it is easy to switch to another bank with lower fees charged on overdrafts. I also don't believe Lloyds allow for arranged overdrafts on their basic account? So I'm not sure I would say "predatory" as to me this implies preying on the weakest.

The banks have known for more than a year what the regulator had in mind for overdraft charges in general. In the full knowledge of the regulator's intention, Lloyds increased their overdraft charges for smaller overdrafts.

Those who could flee the scene had already done so - leaving Lloyds with their own group of overdraft prisoners which they proceeded to royally screw for the time they had before the new regs would apply.

Yes, on that basis I would say that words like "predatory" and "aggressive" are pretty sober descriptions on the Lloyds Group.