If you’re one of the 28 million people with a Lloyds Banking Group account, the amount you pay for overdraft borrowing could be about to change.
The company, which includes Lloyds, Halifax and Bank of Scotland, is overhauling its fees – and while it claims ‘millions’ will be better off as a result, that won’t be the case for everyone.
Overdraft customers were previously charged up to 49.9%, but this is being dropped to a maximum 29.9%. And for some, it could mean savings of as much as £299 annually.
Instead of the current tiered system – where applicants with poor credit are given higher rates – they’ll now be based on an ‘affordability assessment’, factoring in credit history and account activity with the banks.
A spokesperson for Lloyds Bank said: ‘We know many customers find it helpful to have an overdraft there for life’s unexpected costs and, to make that as affordable for our customers as possible, we’re lowering the interest rate most customers typically pay when they use an overdraft.
‘This means the cost of using an overdraft will become cheaper for many, with Lloyds, Halifax and Bank of Scotland now offering one of the lowest representative overdraft rates on the market.’
Potential 12-month savings on a £1,000 overdraft
Customers on the previous 49.9% rate who move to the new 29.9% rate can expect to save £299 per year.
Meanwhile, those who go from 39.9% to 29.9% are looking at a saving of £100 annually.
You can find your current rate on your Lloyds, Halifax or Bank of Scotland account statement, under ‘manage my overdraft’ in the app, or by calling or web chatting with bank customer services.
While fee changes will be rolled out in stages, customers set to benefit from reductions are already being notified.
Money Saving Expert (MSE) explains: ‘You’ll get seven days’ notice, after which your rate will go down automatically. The banks started writing to customers last week, so you may have seen the change already.’
However, some people will see their rates rise. If you’re one of the ‘few’ who this is the case for, you’ll get 60 days’ notice before the staggered increase, with one bump from August 2025 and another from February 2026.
New customers will no longer see the tiered fees either, and will instead be shown the 29.9% representative rate as standard.
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