If you’re struggling with your overdraft, check if you’re able to switch to a 0% account (Image: Getty)
, is hiking interest rate on some accounts run by its three banking brands Lloyds, Halifax and Bank of Scotland.
The changes were confirmed last year when the boss of the banking giant sought to reassure that the “vast majority” of people would pay less or the same. However, some customers will be moved to a higher rate.
Lloyds previously had three overdraft rates.
The cheapest rate was 27.5% and this was available to some Club Lloyd members. The other rates that were available were 39.9% – the standard rate that the majority of customers were on. The third rate was 49.9%.
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Under the new system, most customers will be at 39.9% while some will be at a higher rate of 49.9%.
There will also be new rates of 19.9% and 29.9% from January 31.
This means some customers on the 27.5% may pay either the 49.9% or the 19.9% rate.
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If your rate is going down, this will have come into effect last year.
You should have also already been contacted by Lloyds if your rate is going up, as the banking group introduced two temporary rates in August 2024 – 34.9% and 44.9% – to soften the impact before these customers are moved to either 39.9% or 49.9% rates.
MSE says Lloyds Banking Group has used an “affordability assessment” to determine which rate you should be on.
You may be able to switch your current account to a bank that charges less for an overdraft; some accounts offer 0% per cent interest on customers who are overdrawn.
You may also be able to take advantage of cash bonuses when you switch your account.
First Direct is offering custmers £175, which can be used to pay off overdraft, as well as a 0% overdraft of £250.