Recent Changes To Overdraft Charges
In recent months if you have an overdraft you may have received a letter from your bank about recent changes to your account and how you will be charged. In this article we are going to look at how this could potentially affect you and what steps (if any) you may need to take.
At present the changes only affect Lloyds and Halifax customers, although as with any change like this it is important for other account holders to talk to the bank regarding any potential issues there.
Essentially the change is that customers will be charged a penny per day for every seven pounds in an overdraft. The figures are said to be the equivalent of 52 per cent APR, more than some credit cards. The reason this has occurred was due to a restructuring, the Lloyds group stating that nine out of ten customers would be better off. Unfortunately, however, for the one out of ten this has resulted in some potential difficulties due to the increase in charges.
If you are a Lloyds customer you should have received a letter informing you about the changes. At this point there is an opportunity to go over the options available. For example, it may be better to choose a loan or use a credit card for spending.
This can be difficult as some customers (especially older customers) may be hesitant to apply for loans or credit cards. In recent times, there have been some bad press regarding both but this does not have to be the case, sometimes the rates for a loan or a credit card are more affordable and a better option.
Other providers have also reached out to these customers, offering larger interest free overdrafts for people to switch. This is a good habit for people to get into in general as comparing the different accounts available could result in longer term savings. Equally when comparing you should look at loans or credit cards as well. A credit report is also useful as it will allow you to see what is likely to be available.
What to do
Once you know about the increased overdraft fees it is worth discussing the options available with your bank, such as a different account or credit card. They should show you the options available to you and breakdown the rates involved. While they cannot directly advise you can get an idea of what is there. If you need more information there are helplines and services such as the Citizens Advice Bureau that can also listen to any concerns you may have.
Of course, another option and one that we recommend is talking to us! At Larcomes Financial Services there is the benefit of having the resources and experience to help our customers, as well as the advantage of not being specifically tied to a bank or larger organisation, so we can look over your financial situation and help find a solution best suited to your needs.