Lloyds TSB responds to Barclays' overdraft changes

In November 2007, Lloyds TSB was the first high street bank to overhaul its approach to overdrafts with the focus on helping customers keep on top of their finances and avoid slipping into the red. While Barclays' changes focus on the costs of going into unauthorised overdraft, none of its changes address customers' desire for more control over their finances and advance warning if they are about to go over their limit. Unlike Barclays' customers, all Lloyds TSB customers can get advance warning if they are about to go overdrawn or are getting near their limit.

Lloyds TSB ‘limit alert' text message service - putting customers in control

The Lloyds TSB limit alert text message service warns customers when they are getting close to their overdraft limit and again, when they go over their overdraft limit for just £2.50 per month.

In addition, Lloyds TSB customers can keep track of their finances by registering for a free weekly balance update via text message. Customers can also check on their balance 24 hours a day, seven days a week at one of the bank's 4,000 cashpoints, over the phone or at www.lloydstsb.com if they are registered for Internet banking.

Lloyds TSB grace period - a window of opportunity to get finances straight

All Lloyds TSB customers who accidentally slip into the red or go over their overdraft limit are given a grace period in which to put things right. Provided they contact the bank and make arrangements for their account before 3.30pm that afternoon they will not incur any charges. This might involve increasing their planned overdraft, paying in some cash or moving some money from another Lloyds TSB savings account into their current account.

Lloyds TSB research reveals that the vast majority of people who have unknowingly gone other their limit in the past (92 per cent) think that a grace period - a "window of opportunity" to get their account back on track and avoid any charges is beneficial.

Catherine McGrath, director of current accounts, Lloyds TSB said: "We want to help our customers avoid accidentally slipping into the red and have given them the tools to do just that. Our limit alert text message service puts customers firmly in the driving seat, helping them to manage their money and avoid paying charges all together.

"We encourage customers to contact us if they think they are going to slip into the red so that we can discuss setting up an overdraft, or extending their existing overdraft, free of charge, to help ensure that their payments are covered."

Credit interest - without having to pay for the privilege

Lloyds TSB has a wide range of current accounts designed to meet different customers' needs. For customers who pay in at least £1,000 a month, Lloyds TSB offers ‘Plus' which pays credit interest of 4 per cent AER (3.93 per cent gross) on balances as high as £2,500.

Customers can opt for ‘Plus' on several Lloyds TSB accounts including Classic,

which has no fee, and the Gold, Platinum and Premier added value accounts which come with a wide range of benefits including AA breakdown cover, travel insurance and mobile phone insurance, for a monthly fee.

Catherine comments: "Our Plus accounts are extremely popular and we firmly believe that customers do value credit interest. It costs nothing to have a Lloyds TSB Classic Plus account and customers can earn a very competitive 4 per cent credit interest rate.

We would welcome any Barclays customers who want to earn interest on their current account but don't want to have to pay for the privilege."