Lloyds TSB commences bank charges war

| September 12, 2007 | 0 Comments

Lloyds has become the first bank to trim down its overdraft charges following a consumer rebellion and the forthcoming Office of Fair Trading court action against major UK banks.

Lloyds is 1 of 8 banks that is being taken to court in January 2008 by the Office of Fair Trading for allegedly unreasonable bank charges. The other 7 banks are Abbey, Barclays, Clydesdale Bank, Natwest and its owner HBOS, HSBC, The Royal Bank of Scotland and Nationwide Building Society.

Lloyds is to launch a system that will alert customers when they are about to hit the red, it will commence one month after HSBC plan to introduce a similar system. In addition, Lloyds is to introduce a monthly charge of £15 and a sliding scale of daily charges of between £6-£20. This system is to commence in early November.

Lloyds is also launching a new text message service, which will warn customers if they are within £50 of their overdraft limit or if they have exceeded it. However, if they don’t exceed it, they will have a grace period until 3.30pm that day to eliminate the shortfall and therefore avoid any charges at all.

Under the new Lloyds charging system, exceeding your overdraft limit by less than £25 will cost £6 per day, from £25 to £100 will cost £15 per day and for amounts of £100 or over will be £20 per day. According to Lloyds, customers who exceed their overdraft limit by a small amount, for a short period of time, will be better off under this new pricing structure. Furthermore, Lloyds is cutting its charge for bouncing a cheque, standing order, or direct debit from £35 to £20.

The warning system is similar to that of HSBC, their cash machines are to show warnings to their customers if they have exceeded their overdraft limit. The warning message will come into force at the 3,500 cash machines operated by the bank on October 1st.

A spokesperson for HSBC said their warning system is the world’s first and this has sparked Lloyds to do a similar thing. HSBC added that they will consider reviewing its charges following the announcement from Lloyds but remarked that its rates are still competitive.

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