Lloyds, Halifax and Bank of Scotland issue new overdraft rules with interest rate hike | Personal Finance | Finance

The Lloyds Banking Group, which runs Lloyds Bank, Halifax and the Bank of Scotland, is massively increasing interest rates charged on overdrafts.

The punishing increases come just as millions of people have been driven into debt making them more likely to push their bank account into the red.

The Lloyds’ group current interest charge is usually an already punishing 39.9 percent but some customers, like Club Lloyds account holders, pay 27.5 percent.

However, a new regime means some customers will be charged 49.9 percent interest on the amount they are overdrawn.

The new interest rates will be imposed based on an assessment of a customer’s credit history, which suggest those who have struggled most to cover their bills and debt repayments will suffer the highest rates.

The revamped system will feature four distinct overdraft tiers: 19.9 percent; 29.9 percent; 39.9 percent; and 49.9 percent.

Some of the increases will be introduced in two stages.

People who are seeing an increase from 39.9 percent to the new highest rate of 49.9 percent will have a 5 percent increase in August and then another 5 percent increase in January 2025

Club Lloyds customers who are being switched to a 39.9 percent rate will see a rise of 7.5 percent in August and another 5 percent in January 2025.

Personal finance expert Andrew Hagger, from Moneycomms, said: “Most banks now charge between 35 percent and 40 percent for agreed overdrafts.”

He said some banks offer a better deal with, for example, First Direct, allowing customers to go up to £250 into an overdraft interest free.

Mr Hagger suggested that people should consider alternatives to an overdraft.

For example, he said: “Consider a 0 percent purchases credit card and put what you currently spend on your overdraft on your credit card instead – if you pay off the statement balance in full you won’t pay any interest charges.

“Even if you can’t pay the card in full most cards currently charge around 24.9 percent APR on purchases, so way less than your potential overdraft bill from Lloyds.”

A Lloyds Banking Group spokesperson said: “We are writing to our customers to let them know we’re introducing new interest rate tiers on our overdrafts. The changes mean many will continue to pay the same or less than they do today, while some may see an increase.

“An arranged overdraft allows you to borrow up to a limit based on your requirements and personal circumstances and agreed with us in advance.”

The accounts set to be affected by the changes include:


Classic Account

Club Lloyds Account

Silver Account

Club Lloyds Silver Account

Club Lloyds Platinum Account



Ultimate Reward Current Account

Reward Current Account

Current Account


Bank of Scotland

Platinum Account

Silver Account

Classic Account

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