Lloyds, Halifax and Bank of Scotland raise overdraft rates to 49.9% for some customers

Lloyds, Halifax and Bank of Scotland raise overdraft rates to 49.9% for some customers

Customers with Lloyds Banking Group will see their overdraft rates more than double in some cases

Stephen Little
Wed, 01/22/2020 – 15:17


Millions of Lloyds, Halifax and Bank of Scotland could see their overdraft rates go up to as much as 49.9% from April.

From 6 April, Lloyds Banking Group will be charging overdraft users a new personalised rate depending on their credit score.

Lloyds says that most customers will pay 39.9% while those with a Club Lloyds account will pay 27.5% interest.

However, customers with a poor credit history who fall under its ‘risk-based’ pricing model could end up paying a rate of 49.9%.

Lloyds says that the fee-free buffer will also be reduced to £50 on some accounts, while those with a Premier account will see it fall to £250.

Arranged overdrafts and student or graduate accounts will remain free.

Currently, Lloyds charges 1p for every full £6 you borrow up to £1,250, 1p for every further full £7 you borrow between £1,250 and £2,500, and then a further 1p for every full £8 you borrow over £2,500.

A spokesperson from Lloyds says: “We are writing to our customers to explain the new overdraft rates that will apply from April 2020. As a result of these changes, 90% of customers with an overdraft will pay less than they do today.

“The majority of customers will pay the APR of 39.9% on most of our current accounts, 27.5% on our Club Lloyds account. Customers will be offered a personalised overdraft rate, up to 49.9%, depending on their circumstances. We have not charged unarranged overdraft fees or returned item fees since 2017, and this will not change.”

Lloyds says 90% of its customers with an overdraft will now pay less and everyone will pay a lower rate on their borrowing. Of those that will pay more, the average monthly increase is £1.89 and no-one will pay more than £10 extra a month.

If you have a Lloyds Classic account and you are overdrawn by £500 for seven days you will pay £3.22 at a rate of 39.9%, while those on 49.9% will pay £3.85.

What are other banks charging?

The news comes after a number of similar announcements from other major banks and building societies.

The charges from Lloyds Banking Group are the highest that have been revealed so far and more than double than what you would pay on a standard credit card.

Nationwide was the first lender to announce it was introducing new overdraft charges in November with a rate of 39.9%.

Other lenders charging 39.9% include HSBC, First Direct, M&S Bank and TSB.

NatWest and RBS both charge 39.48%, while Barclays charges 35%. Monzo and Starling charge the lowest rates, starting at 19% and 15%, respectively.

Why is this happening?

Under new plans from the Financial Conduct Authority, banks and building societies will no longer be able to charge higher interest rates on unarranged overdrafts than they do on arranged ones from 6 April.

They will also not be allowed to charge fixed fees for overdrafts. Instead they will have to introduce a simple interest rate.

The watchdog has done this to remove expensive unarranged overdraft charges of up to £5 a day in some cases.

However, with most banks and building societies charging 40% for overdraft fees, the move has drawn widespread criticism, with fears customers could end up paying even more.

John Crossley, head of money at Comparethemarket, says: “Lloyds has said it will decide a customer’s interest rate based on their credit rating – similar to Monzo and Starling – but customers with a low credit score could see their overdraft rates jump as high as nearly 50% – the highest amount we’ve seen announced so far.

“Customers should take note of these new overdraft rates and consider switching current account to a better deal with potentially lower overdraft rates. Equally, if you need to borrow money, using a 0% credit card can be a more cost-effective option than dipping into your overdraft.”

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Grieving parents to get two weeks of leave under new law

Grieving parents to get two weeks of leave under new law

Parents will have the statutory right to paid bereavement leave from April

Emma Lunn
Thu, 01/23/2020 – 11:06


Working parents who lose a child under the age of 18 will get two weeks’ statutory leave under “Jack’s Law”.

The Parental Bereavement Leave and Pay Regulations were announced by business secretary Andrea Leadsom. The new law will be known as Jack’s Law in memory of Jack Herd whose mother Lucy campaigned tirelessly on the issue.

From April, working parents will have a statutory right to a minimum of two weeks’ leave if they lose a child under the age of 18, or suffer a stillbirth from 24 weeks of pregnancy, irrespective of how long they have worked for their employer.

The Government claims this is the most generous offer on parental bereavement pay and leave in the world.

Parents will be able to take the leave as either a single block of two weeks, or as two separate blocks of one week each taken at different times across the first year after their child’s death. This means they can match their leave to the times they need it most, which could be in the early days or over the first anniversary.

Leadsom says: “There can be few worse experiences in life than the loss of a child and I am proud that this government is delivering ‘Jack’s Law’, making us the first country in the world to do so.

“When it takes effect, Jack’s Law will be a fitting testament to the tireless efforts of Lucy Herd, alongside many charities, to give parents greater support.”

Lucy Herd says: “In the immediate aftermath of a child dying, parents have to cope with their own loss, the grief of their wider family, including other children, as well as a vast amount of administrative paperwork and other arrangements. A sudden or accidental death may require a post-mortem or inquest; there is a funeral to arrange; and there are many other organisations to contact, from schools to benefit offices.

“When I started this campaign 10 years ago after the death of my son Jack, I always hoped that a positive change would happen in his memory. Knowing that nearly 10 years of campaigning has helped create ‘Jack’s Law’ is the most wonderful feeling, but it is bittersweet at the same time. I am so grateful to all those involved who have helped make this possible. I was told many times that I would not succeed but Jack’s Law will now ensure that bereaved parents are better protected in the future.”

About 7,500 child deaths, including around 3,000 stillbirths, occur in the UK every year. The Government estimates that this new entitlement will help to support about 10,000 parents a year.

The right to parental bereavement leave will come into force on 6 April 2020, subject to Parliamentary approval of the legislation. Parents employed in a job for six months or more will also be able to claim statutory pay for this period, in line with the approach for other parental entitlements, such as paternity leave and pay.

However, some critics say that the new law doesn’t go far enough. Unite, Britain and Ireland’s largest union, is calling for the government to extend bereavement leave to those who have lost a close relative or suffered a miscarriage. 

Unite assistant general secretary Diana Holland says: “Jack’s Law is a welcome first step in providing leave for people who have suffered a bereavement. Legislation must now be extended to include leave for those who have lost a close family member or are dealing with the grief of miscarriage. 

“Where the union has negotiated bereavement and miscarriage leave policies, there are protections. In other workplaces, people can feel isolated and be pressured into working or even risk their job by taking the time they need.”

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Four ways to clear your Christmas debt

Four ways to clear your Christmas debt

People across the UK face ‘Red Wednesday’ woes as Christmas debt tips bank accounts into the red today. 

Brean Horne
Wed, 01/22/2020 – 11:49


Bank accounts across the nation are expected to fall into the red today as the true extent of Christmas debt hits, according to new research from Credit Karma.

The average Briton owes £623 to creditors, taking the collective debt to £14bn, the consumer technology company estimates.

It’s expected to take four months on average for people to clear their Christmas debt. 

Akansha Nath, credit expert at Credit Karma said: “We can all be guilty of overspending at Christmas, so it’s no surprise to see Brits facing extra financial strain in January.  

“It’s daunting to think that we might be well into April before we’re consistently back in the black, but rather than using ‘quick fixes’ to free up some extra cash, there are lots of simple ways to get back in control of our finances.”

If you’re suffering from a Christmas debt hangover we’ve rounded up four simple ways to help you clear it.

1. Make a repayment plan

It’s easy to turn a blind eye when your debts build up with the intention of sorting them out later.

Making a plan of action, however, is the best way to start.

Having a repayment plan will make it easier to keep track of how much you owe and how much you’ll need to pay off to be debt free within your desired time frame.

2. Make strategic repayments

Prioritising your repayments is key.  As a general rule, you should aim to clear your most expensive debts first.

These are usually sitting on credit cards or overdrafts where interest rates tend to be higher.

Larger expenses such as keeping up with your mortgage repayments should be a high priority too.

3. Make your debt cheaper

You can cut the cost of your credit card debt by using a 0% balance transfer credit card.

This will allow you to shift your debt to a card that charges no interest for certain period of time.

Setting up a monthly direct debit can help you pay down the cost of your debt.

4. Stop taking out more credit

Paying off your debts should come first.

While expenses during the year are unavoidable, making cutbacks where possible can help ensure you beat your Christmas debt.

Once it is taken care of, you can start putting money away for December 2020 and avoid falling into debt.

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UK employment rate hits record high

UK employment rate hits record high

Unemployment is at its lowest since 1974, according to government figures.

Emma Lunn
Wed, 01/22/2020 – 10:56


The thriving UK jobs market means the country has hit a record high employment rate at 76.3%, with the unemployment rate not lower since 1974. Wage growth has outpaced inflation for the 22nd consecutive month.

Figures from the Department for Work and Pensions show that all regions in the UK have benefited from an upturn in employment since 2010. In the North West the number in work has climbed to a record high of 3.55 million.

The DWP says women have benefitted the most from the thriving UK jobs market – with 317,000 more entering work in the past year alone.

Ministers also claim the figures show an uplift in people taking up quality careers offering real progression – with 3.1 million more people in higher skilled work since 2010.

Mims Davies, minister for employment, says: “These figures show not only more people in work than ever before, but it’s also pleasing to see alongside this a rise in those working in higher skilled roles. It means at the dawn of the decade the opportunities to progress in work are out there, with people already benefiting from another month of rising wages.

“This, coupled with business confidence turning a corner, is paving the way for an even stronger jobs market in 2020.

“And with unemployment at its lowest since the 1970s, our jobcentres go beyond getting people into work – they are about community and progression. Reaching out to more people, and supporting those in work to get ahead.”

However, the figures also show a rise in so-called “zero hours” contracts – where workers are not guaranteed a minimum number of hours each week. Between 2013 and 2019, the proportion of workers on zero hours contracts in total employment increased by 0.8 percentage points to 2.7%.

The latest data for the period April to June 2019 show that there were 896,000 workers on zero hours contracts with more women (483,000) than men (413,000) on this type of employment contract.

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New veterans railcard to offer a third off train travel

New veterans railcard to offer a third off train travel

A new railcard offering cheaper fares for military veterans will be launched on Armistice Day.

Emma Lunn
Wed, 01/22/2020 – 09:35


Transport secretary Grant Shapps has announced a new railcard offering veterans cheaper train travel.

The card will be available from 11 November 2020 and will offer a third off most train fares to more than 830,000 veterans not covered by existing discounts. The railcard will cost £21 for a limited period, before rising to £30.

Shapps says: “Every part of society should honour the debt we owe those who’ve served our country. I’m proud that the Department for Transport, together with other government colleagues and the rail industry, is doing its bit.

“This railcard will help open up opportunities to veterans, whether through employment and retraining, or by strengthening links with friends and family. I believe that enabling former service personnel to travel more easily is the least we can do.”

The railcard forms part of the government’s veterans’ strategy coordinated by the recently-established Office for Veterans Affairs. The action plan sets out support for those who served in areas including community and relationships, employment and skills, health and wellbeing, finance and debt, housing, and contact with the law.

Cabinet Office minister Oliver Dowden, who represents the office for veterans’ affairs (OVA), says: “The office for veterans’ affairs was set up to get things done for our veterans. I am pleased to see that the OVA is already able to show it is achieving just this, working with the Department for Transport to deliver this railcard.

“Our new action plan will help to make the UK the best place in the world for veterans. The Office for Veterans’ Affairs will drive the plan from the heart of government, working to help veterans on jobs, housing and health, through better data and a more joined up approach.”

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TSB to introduce 39.9% overdraft interest rate

TSB to introduce 39.9% overdraft interest rate

TSB is the latest bank to announce overdraft fee changes.


Brean Horne
Tue, 01/21/2020 – 12:10


TSB will introduce a fixed interest rate fee of 39.9% on arranged and unarranged overdrafts from 2 April 2020. 

Customers with an arranged overdraft currently pay a £6 monthly usage fee and have a £35 fee-free buffer.

Those who use an unarranged overdraft pay £5 per day if they’re overdrawn by £10 to £25 or £10 a day for sums over £25.

From 2 April the bank will scrap all daily and monthly fees as well as removing the £35 fee-free buffer.

TSB estimates that 70% of its customers will pay the same or less of their overdraft once the changes come into effect.

Why is TSB increasing its overdraft fee?

Lenders make more than £2.4 billion from overdrafts each year, with about 30% of this coming from unarranged overdrafts, according to the Financial Conduct Authority. The financial watchdog has unveiled new plans to overhaul the industry.

From 6 April 2020, banks and building societies will no longer be able to charge higher interest rates on unarranged overdrafts than they do on arranged overdrafts.

They will also be banned from charging additional fixed fees.

Instead, lenders will have to use a simple interest rate to make overdrafts “simpler, fairer and easier to manage.”

How does TSB’s new overdraft fee compare?

TSB will introduce a flat fee of 39.9% for its overdrafts, making it one of the more expensive banks to use.

Customers will be charged a flat interest rate of either 15%, 25% or 35% depending on their credit score.

The table below shows how TSB’s fee for a £100 overdraft compares to other lenders. Starling Bank currently offers the cheapest overdraft fee.

Bank New overdraft fee Charge over 7 days Charge over 30 days
Nationwide 39.90% 65p £2.79
HSBC 39.90% 65p £2.79
first direct 39.90% 65p £2.79
M&S Bank 39.90% 65p £2.79
TSB 39.90% 65p £2.79
NatWest 39.48% 64p £2.77
RBS 39.48% 64p £2.77
Barclays 35% 57p £2.49
Monzo 19%/29%/39% 33p/49p/63p £1.44/£2.11/£2.74
Starling Bank 15%/25%/35% 27p/43p/59p £1.16/£1.86/£2.52

How to cut the cost of your overdraft

Overdrafts can be handy for short-term borrowing.

To make sure you get the best rate on your overdraft, it’s important to shop around.

While banks are starting to introduce single flat interest rates, there is some competition in the market.

Starling Bank and Monzo, for example, offer the cheapest interest rates for eligible customers at 15% and 17% respectively.

Barclays will also keep it’s £15 interest-free buffer which could help cut the cost of going into an overdraft.

If you have a bigger overdraft, a specialist money transfer credit card could help reduce your overdraft repayments.

A money transfer card allows you to move money from your credit card to your bank account.

These cards often come with an initial transfer fee and a fixed 0% interest period.

Tesco Bank currently offers the longest 0% interest period of 28 months.  

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