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Lloyds TSB to cut overdraft fees | Lloyds TSB to cut overdraft fees |
(about 1 hour later) | |
Going overdrawn without permission at Lloyds will become cheaper | Going overdrawn without permission at Lloyds will become cheaper |
Lloyds TSB is to cut the overdraft fees on its current accounts from December. | Lloyds TSB is to cut the overdraft fees on its current accounts from December. |
From 2 December it is cutting the daily and monthly fees for customers who go overdrawn without permission and will halve to £10 the fee for bouncing a cheque or electronic payment. | From 2 December it is cutting the daily and monthly fees for customers who go overdrawn without permission and will halve to £10 the fee for bouncing a cheque or electronic payment. |
The bank admitted it was responding to complaints from its customers about how much they were being charged. | |
However authorised overdrafts will now incur a £5 a month charge, in addition to their normal interest charges. | |
"The reason we are making these changes is in response to customer feedback," said Mike Regnier, a Lloyds TSB director. | |
"Our customers are telling us that they still think our unarranged overdraft fees are too high and we are responding to that very directly by cutting them - and it is as simple as that," he added. | |
Interest | |
Lloyds also said it would stop paying any interest on its standard current accounts to customers in credit. | |
It currently pays just 0.1% annual interest to the account holders but will now pay nothing at all. | It currently pays just 0.1% annual interest to the account holders but will now pay nothing at all. |
Lloyds, in which the government is a substantial minority shareholder, said most of its customers who went into the red without permission would now pay less than half their current level of charges. | Lloyds, in which the government is a substantial minority shareholder, said most of its customers who went into the red without permission would now pay less than half their current level of charges. |
"All customers who use an unplanned overdraft facility will pay less under the new structure," said Mr Regnier. | |
"Almost 70% of customers who use an unplanned overdraft will pay less than half what they currently pay," he added. | |
The changes | The changes |
Customers who go into the red will still be charged interest and there is no change to the rate currently being levied of 19.3%. | Customers who go into the red will still be charged interest and there is no change to the rate currently being levied of 19.3%. |
The main changes to the Lloyds TSB overdraft fees are: | The main changes to the Lloyds TSB overdraft fees are: |
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The consumers' association Which? said that, despite the cuts, it would still be very expensive for Lloyds TSB customers who went into the red without permission. | The consumers' association Which? said that, despite the cuts, it would still be very expensive for Lloyds TSB customers who went into the red without permission. |
"You can still pay £40 a day for up to eight days a month," said Vera Cottrell of Which?. | "You can still pay £40 a day for up to eight days a month," said Vera Cottrell of Which?. |
"The fees are still very, very high, and customers with authorised overdrafts will now have to pay £5 where they did not before." | "The fees are still very, very high, and customers with authorised overdrafts will now have to pay £5 where they did not before." |
Pressure | Pressure |
The bank's decision to make its overdrafts cheaper reflects intense pressure from the government and campaign groups. | The bank's decision to make its overdrafts cheaper reflects intense pressure from the government and campaign groups. |
Last month, the coalition government said it would stop "unfair" bank and other transaction charges. | |
Last year the banking industry was successful in defeating an attempt by the Office of Fair Trading to regulate its charges. | Last year the banking industry was successful in defeating an attempt by the Office of Fair Trading to regulate its charges. |
But the previous Labour government, and now the recently elected coalition government, both threatened to bring in new laws if bank charges were not made fairer and cheaper. | But the previous Labour government, and now the recently elected coalition government, both threatened to bring in new laws if bank charges were not made fairer and cheaper. |
Last October, Royal Bank of Scotland - which is majority-owned by the taxpayer - cut its overdraft charges. | Last October, Royal Bank of Scotland - which is majority-owned by the taxpayer - cut its overdraft charges. |
It was soon followed by Santander which started offering a bank account to mortgage customers that does not charge for unauthorised overdrafts, nor charge a fee for payments that bounce. | It was soon followed by Santander which started offering a bank account to mortgage customers that does not charge for unauthorised overdrafts, nor charge a fee for payments that bounce. |