The changes were announced back in June when the Lloyds Banking Group wrote to current account customers of the three brands to inform them of upcoming changes to the interest rate applied to overdrafts.
These changes have now taken effect and will see some customers pay an APR of 49.9% on overdrafts.
Previously Lloyds, Halifax and Bank of Scotland customers were charged 27.5%, 39.9% or 49.9% interest on overdrafts.
But two new lower tiers have now been introduced at 19.9% and 29.9%. There are also two temporary rates of 34.9% and 44.9% in place for six months, meaning there are now six tiers in total:
- 19.9%
- 29.9%
- 34.9% (temporary rate)
- 39.9%
- 44.9% (temporary rate)
- 49.9%
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The 27.5% rate, which was paid by some Club Lloyds customers, has been removed. Lloyds said 39.9% remains its ‘standard rate’.
Which rate you get will be based on an affordability assessment, including your credit history and how you use any accounts you have with the banks.
Lloyds said the “vast majority” of its customers with an arranged overdraft will see their rate stay the same or fall. Customers whose rate has fallen should have been notified seven days in advance.
If your rate is going up you should have received a letter explaining the change. You’ll first be put on a 34.9% or 44.9% rate for six months to “limit the impact” of the increase; after that, your rate will rise again to either 39.9% or 49.9%.
