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Lloyds TSB reduces overdraft charges

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by Kay Mitchell

From 2 December, Lloyds TSB will reduce the overdraft fees on its current accounts.

The move comes just a month after the new coalition Government said it would introduce measures that will see an end to “unfair” bank charges, as well as excessive interest rates on credit cards.

The banking industry was successful in a legal battle last year against the Office of Fair Trading, which saw the Supreme Court rule in favour of the banks over the fairness of charges and other fees.

Meanwhile a spokesperson for Lloyds said: “All customers who use an unplanned overdraft facility will pay less under the new structure.

“Almost 70% of customers who use an unplanned overdraft will pay less than half what they currently pay,” the spokesperson added.

In addition, those who are overdrawn by £10 will not have to pay any charges at all, said the bank.

Lloyds said existing customers will receive a letter between July and the end of September outlining details about the new fee structure. The current arrangements will remain in place until 2 December.

However, consumer group Which? said it will still be very expensive for Lloyds TSB customers who went into the red without permission.

According to Vera Cottrell of Which?: “You can still pay £40 a day for up to eight days a month. The fees are still very, very high, and customers with authorised overdrafts will now have to pay £5 where they did not before.”

In the meantime, Lloyds said will cease to pay interest on its standard current accounts. Currently, it pays 0.1% annual interest but will now pay nothing at all.

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News posted: June 24, 2010

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