Customers at Halifax, Lloyds or the Bank of Scotland are facing a huge increase in overdraft charges – with some seeing the penalty for dipping into it almost doubled.
A shake up of fees is hitting the Lloyds Banking Group, which owns all of the aforementioned brands.
Tweeting about the issue, Martin Lewis warned: “Warning: Lloyds, Halifax, Bank of Scotland customer? It could be about the increase your overdraft to 50%.”
The company insists that most customers will be charged the same or less than before, but there are some who will be paying more, such as Club Lloyds customers who will see their interest rate on overdrafts surge from 27.5 percent to 49.9 percent.
Some Bank of Scotland, Halifa and Lloyds customers were on 39.9 percent rates and some were on 49.9 percent already, and they are being moved to a new rate anywhere between 19.9 percent and 49.9 percent.
The rate you get depends on an “affordability assessment” which includes credit history and your usage in the past.
Those whose rates are going up will be given 60 days’ warning while those with a rate going down will get seven days.
But some banks offer interest-free overdrafts (it’s not just for students!), such as First Direct, which gives you 0 percent on a £250 overdraft (or 39.9 percent above £250), while Nationwide has a FlexDirect which gives 0 percent interest on overdrafts of up to £1,500 for the first year.
There are other options available too, such as a money transfer credit card. These allow you to get paid money into your account which is then borrowed from a credit card at 0 percent for a fixed period, effectively loaning you the money – free of charge as long as you pay it back in full before the fixed period ends.