Lloyds and Halifax announce new overdraft rules for millions of customers

Lloyds has made a big change to its overdrafts for MILLIONS of customers. Lloyds Banking Group, which runs Lloyds Bank, Halifax and the Bank of Scotland, is shaking up the way it charges for arranged overdrafts with customers impacted.

Lloyds' current interest charge is usually 39.9% but some customers, like Club Lloyds account holders, pay 27.5%. Under the new system, some customers will be charged 49.9% interest on the amount borrowed - a 10 percentage point hike - from August.

A Lloyds Banking Group spokesperson said: "We are writing to our customers to let them know we’re introducing new interest rate tiers on our overdrafts. The changes mean many will continue to pay the same or less than they do today, while some may see an increase."

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Andrew from Moneycomms added: "Most banks now charge between 35% and 40% for agreed overdrafts, but depending how much you borrow, First Direct may be an option worth considering as the first £250 of any agreed overdraft is interest free." He said: "Consider a 0% purchases credit card and put what you currently spend on your overdraft on your credit card instead - if you pay off the statement balance in full you won't pay any interest charges.

"Even if you can't pay the card in full most cards currently charge around 24.9% APR on purchases, so way less than your potential overdraft bill from Lloyds." An arranged overdraft allows you to borrow up to a limit based on your requirements and personal circumstances and agreed with us in advance.

Daily arranged overdraft interest is charged at the end of each day that you use your arranged overdraft. There is no fee for setting up your arranged overdraft. The full list of accounts impacted includes:

Bank of Scotland

Platinum Account

Silver Account

Classic Account

Lloyds

Classic Account

Club Lloyds Account

Silver Account

Club Lloyds Silver Account

Club Lloyds Platinum Account

Halifax

Ultimate Reward Current Account

Reward Current Account

Current Account