Lloyds, Halifax and Bank of Scotland customers face a fee increase from today as new overdraft rates take effect.
The shake-up to interest fees was announced by Lloyds Banking Group – which owns all three brands – in August last year and will mean some customers will see their rate almost double, from 27.9% to 49.9%.
The bank said that some customers will pay the same rate or less, with some seeing rates drop to 19.9% or 29.9%, while others will face a higher fee.
Lloyds said it is reviewing everyone individually and the rate customers will be charged is based on an “affordability assessment”, which includes your credit history and how you use your bank accounts.
According to MoneySavingExpert, the bank confirmed its standard rate would remain at 39.9% and the “vast majority” of customers with an arranged overdraft will pay either the same rate, or less.
Rates initially increased in August 2024, when temporary rates of 34.9% or 44.9% were introduced. These temporary rates have now ended and have increased to either 39.9% or 49.9%.
The changes, as of January 31, 2025, mean that all Lloyds, Halifax and Bank of Scotland customers with an overdraft will now be moved to one of four new rates of either 19.9%, 29.9%, 39.9% or 49.9%, with the majority being charged 39.9%. If you don’t have an overdraft set up on your account then these changes won’t affect you.
Customers whose overdraft rates have changed should have received a letter, email or text from their bank to confirm this.
You can check what your current rate is by checking your latest current account statement, or calling your bank directly.
If you have been moved onto the highest rate it is worth shopping around to see if you can get a cheaper deal somewhere else.
You may have the option of switching to a different Halifax, Lloyds or Bank of Scotland account with an interest-free overdraft, or you could opt to switch banks instead if you can find a better offer.
As an example, First Direct currently offers a £250 interest-free overdraft, depending on your credit history, while Nationwide has a £50 interest-free overdraft offer.
