Lloyds Bank is making a major change to a popular overdraft perk from June 8. The bank is scrapping the £50 interest-free buffer currently available on arranged overdrafts for customers with Silver, Gold and Platinum packaged current accounts.
It means affected customers will start being charged daily interest on any arranged overdraft borrowing from that date, rather than paying interest only once they exceed the £50 buffer. The change could hit thousands of customers who occasionally dip into their overdraft by small amounts and have previously relied on the interest-free cushion to avoid extra charges.
A Lloyds spokesperson said: “At the moment, if a customer has an overdraft they can have different interest‑free amounts depending on what type of account they have and we’re moving to a more consistent approach, so customers with similar accounts have the same interest free amounts.
“We’re contacting customers to explain if there is going to be a change in their interest-free amount, to confirm there’s no change to their arranged overdraft limit, and to highlight where to get help if they need it.”
Lloyds’ own overdraft calculator says that from June 8, the £50 interest-free amount on Silver, Gold and Platinum arranged overdrafts will be removed, with daily interest charged on any arranged overdraft borrowing.
The change will apply to Lloyds Silver, Gold and Platinum packaged account customers, while Club Lloyds customers will continue to receive a £100 interest-free buffer.
The bank is also abolishing its Select account, with customers being moved to its Classic account from July 1.
Classic accounts do not include a £50 interest-free arranged overdraft buffer, meaning Select customers who use the facility could also face higher costs after the switch.
The move means customers who regularly use their overdraft may need to check whether their current account still offers good value, particularly if they pay a monthly fee for a packaged account.
Packaged accounts often include extra benefits such as travel insurance, mobile phone cover or breakdown cover, but they are only worthwhile if customers actually use the perks.
Customers who are unhappy with the change can consider switching bank accounts, reducing overdraft use, or contacting Lloyds to discuss their options.
Anyone struggling with overdraft debt should seek free help from organisations such as StepChange, National Debtline or Citizens Advice.
