In an attempt to reduce the number of customers that go overdrawn or exceed authorised overdraft limits, Lloyds TSB has announced plans to introduce a text message system that will send people a message when they are approaching their limit, the Telegraph has revealed.
However, the plans to help their 11 million customers remain within their overdraft limits also marks another defeat for free banking, as they will be charged for the privilege of the text alerts – £2.50 a month after an introductory free period until the end of the year.
Currently, Lloyds already send customers a free weekly text informing them of their current bank balance, but the new ‘limit alert’ texts, available from 2 November, will alert customers when their balance is within £50 of their overdraft limit and again when they have exceeded their limit.
Samantha Owens, from money search engine Moneyfacts.co.uk said: “Customers really have to consider whether they will make full use of the text alerts. If they are unable to check their balance through cash machines, internet, branch or telephone banking, this may work out cost-effective, as it will give them the ability to move funds before being charged, which will still cost £20 an item even after the cost reduction.”
In line with the Office of Fair Trading’s ruling that the fees for exceeding overdrafts were disproportionate, Lloyds TSB is also among those banks that have cut their fees for overdrafts, returned cheques and direct debits from £35 to £20.
Lloyds has returned £36 million in unfair bank charges in the first six months of 2007, despite the fact that they claim only one in five of its customers pay such fees. In total, people have claimed back more than £2.6 billion since the unfair bank charges campaign began last year.
Lloyds TSB are also cutting their unauthorised overdraft interest rates, from 30 per cent to 10 per cent, in some instances, and other banks are expected to follow, prompted by the test case launched by the Office of Fair Trading in July.
Ms Owens thinks it is likely that Lloyds is decreasing its charges in preparation for the OFT ruling next year in a text case scheduled for January, she told the Telegraph.
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