Lloyds TSB overdraft fees reduced
Lloyds TSB is introducing a new overdraft fee structure for all of its existing and new personal current accounts customers from 2 December.
All customers who use an unplanned overdraft facility will pay less under the new structure. Almost 70 per cent of customers who use an unplanned overdraft will pay less than half what they currently pay. All unplanned overdraft fees and charges for returned items will be significantly reduced.
The Group is also publishing online today its OFT customer scenarios for unplanned overdraft charges. They show the unplanned overdraft fees payable today and those payable as a result of the new structure after it is introduced in December.
A number of other changes have been made to the Lloyds TSB overdraft charging structure. They include:
A new fee free and interest free ‘buffer' zone (£10) will be introduced for both planned and unplanned overdrafts.
Customers will pay a new £5 usage fee if they use an overdraft (either planned or unplanned). Only one such usage fee will be payable in any one monthly billing period.
Customers will be able to take advantage of the Mobile Banking service, which will be free for all customers from 2 December. The current monthly charge for this service is £2.50. This will help customers avoid overdraft fees altogether.
All existing customers will be written to between July and the end of September with details about the new charging arrangements. The current fee structure will remain in place until 2 December.
Customers who have an Added Value Account or Student / Graduate account with an interest and fee-free overdraft arranged will not pay the £5 fee as long as they stay within the interest and fee-free amount.
Significantly lower unplanned overdraft charges
All customers who use an unplanned overdraft facility will pay less under the new pricing structure. Customers who go into their unplanned overdraft will no longer pay a Monthly Unplanned Overdraft fee of £15. They will also pay lower daily fees. They will pay, however, the new £5 Monthly Overdraft Usage fee (see below) if they hadn't previously used an overdraft in that month.
The daily fees in all tiers are being reduced. For example, the new fee free and interest free £10 ‘buffer' means that the £6 daily charge for unplanned overdrafts under £10 will no longer apply. The cap on the number of daily fees a customer can incur in one monthly billing period will also be reduced from ten to eight.
Returned item fees will be halved from £20 to £10. This fee is applied when there are insufficient funds in the account to honour a cheque, standing order or direct debit and we do not agree to give the customer an unplanned overdraft to cover the payment.
Under the new structure, customers will pay a £5 Monthly Overdraft usage fee if they use their planned or unplanned overdraft. Only one such usage fee will be payable in any one monthly billing period. The majority of customers will not pay this fee on a regular basis. This is because most people remain in credit and do not use an overdraft very often. Debit interest will remain the same.
One outcome of the OFT market study into personal current accounts (PCAs) was an agreement with industry and consumer groups to develop illustrative customer scenarios on ways in which a consumer may incur unarranged overdraft charges. The Group is also publishing online today its OFT customer scenarios for unplanned overdraft charges. They show the unplanned overdraft fees payable now and those payable as a result of the new structure.
Giving customers more control over their finances
A new fee free and interest free £10 ‘buffer' is being introduced for both planned and unplanned overdrafts. The buffer is designed to prevent any small dip into the red leading to overdraft charges. Lloyds TSB will also be offering its Mobile Banking service (currently £2.50 per month for most accounts) free to all new and existing customers from 2 December for free. Through this service customers can set up:
Low and High Balance alerts to advise them when their current account balances go above or below certain levels, which customers can specify. This allows customers to avoid using their overdraft facility altogether
A ‘near limit' alert when their balance is within £50 of its account or planned overdraft limit, helping customers avoid unplanned overdraft fees
An ‘over limit' alert when their balance is over its limit or if a payment can't be made because there is not enough money in the account
Customers can transfer money between eligible accounts using the mobile banking application
Mike Regnier, Personal Current Account Director, Lloyds TSB said: "We have made a whole range of improvements to our charging structure, including a significant reduction in fees. All customers who use an unplanned overdraft facility will pay less under the new structure. Almost 70 per cent of customers who use an unplanned overdraft will pay less than half what they currently pay."