Lloyds, Halifax and Bank of Scotland customers could see their interest rate go up from today.
, which owns all three brands, confirmed the shake-up last year and told that the “vast majority” of people will 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% - this was the standard rate that the majority of customers were on - and 49.9%. Under the new system, the 39.9% remains in place and continues to be the rate most customers are on, and there is also still be a higher rate of 49.9%.
But the banking group is also introducing new rates of 19.9% and 29.9% from January 31. It means someone who was on the cheapest rate of 27.5% as a Club Lloyds member, could see themselves moved to the highest rate of 49.9% from later this week - but some customers could also see their rate go down if they're moved to the 19.9% rate.
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.
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How to cut your overdraft costs
If you're struggling with your overdraft, check if you're able to switch to an account with a 0% overdraft, so you have more time to clear what you owe without being charged interest. Make sure you check if you're likely to be eligible first before you apply. Another alternative could be to look at a 0% money transfer card.
These are a special type credit card that pays cash into your bank account, for a one-off fee. You would then use this money to pay off your overdraft, so you're not accruing more interest in overdraft fees. You should always make sure you can pay off your 0% money transfer card before your interest-free period is up - otherwise you'll start to be charged interest, which defeats the point of using this card.
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