With Lloyds, Halifax or Bank of Scotland? Check your mail as your charges could quadruple

In an attempt to make things ‘simpler’, Lloyds, Halifax and Bank of Scotland is upping its overdraft fees (for some) and lots of you could miss this news if you’re not the best at opening letters, like me.

Starting from November 2nd 2017, the price for using the overdraft is 1p for every £7 you borrow each day.

Lloyds bank

The example it gives is if you are overdrawn by £500, then considering the fee is 1p for every £7, you divide the overdraft by 7 and round down. So £500 means you pay 71p a day. Which is not a small amount of money and will add up quickly.

David (a friend of mine), has been banking with Lloyds for years, but luckily opened the letter that came and did a few calculations.

He said: “I’m often nearly 1.5k drawn on bad months. Just done a back of the envelope calculation on last months figures and it puts fees to £80 under the new scheme.

“I was charged £21 under the old one.”

Is it bad for everyone?

Well actually, this could be good news. It seems that you may be better off if you have a small overdraft which you use occasionally.

If you do go into your overdraft, you’ll no longer have to pay fees and if you miss a payment, no fine there either.


If it’s less than £650ish (arranged or unarranged), you’re probably better off. If you’re like David and have an arranged overdraft over that, you’re going to see a significant rise in interest charges.

What can you do if you’re going to end up paying more?

If you are one of those unlucky people with a big unplanned overdraft, your bank should be contacting you around now to offer you a ‘tailored transition plan’, to review other options.

If you’re unhappy with the ‘tailored transition plan’, you could always up and leave.

It’s worth checking out MoneySavingExpert’s bank account guide which has a list of the best bank accounts to swtich to.

Their best current picks for people who are overdrawn a lot are:

  • First Direct – £250 0% overdraft, plus a free £100 when you switch
  • Nationwide FlexDirect – 12 months 0% overdraft (which will give you time to actually get out of the overdraft)

If you are struggling to cut back on your overdraft, check out my guide which explains all.

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