Several of the UK’s major banks, including Lloyds TSB and Halifax, are planning to hike their fees for overdraft and other current account services.
As of the 2nd October customers of both banks will see the interest rate on their overdraft increase by as much as 5 per cent, with some also adding as much as £24 per year to their current account fees.
Bank of Scotland’s premier customers will be the hardest hit, as their overdraft interest rate increases from 10.43 to 15.43 per cent, meaning that a £3000 overdraft will cost £463 in interest if kept for a year.
Application fees are also being introduced for approved overdrafts on certain current accounts. Kevin Mountford, of Moneysupermarket.com said “It’s not surprising that we are seeing bank’s lending rates go up, as their balance sheets are increasingly squeezed.”
Halifax, Lloyds TSB and Bank of Scotland, all of whom are part of the Lloyds banking group are among the first to announce widespread fee increases for their products, whether or not other UK banks will follow suit remains to be seen.
“Although these increases are small in most cases, the collective effect of such rises in combination with other increasing costs will have a significant impact on household budget” stated Mountford..