In a new development for the unfair bank charges situation, Lloyds TSB has announced that it will soon be launching a new ‘text limit’ service, to help customers avoid becoming overdrawn and encountering charges.
The service will be free for the rest of this year, but then customers who opt to subscribe to the service will have to pay a fee of £2.50 per month. This will get them a text alert if they go within £50 of an unauthorised overdraft, or exceeding an overdraft limit.
This is to encourage people to do something about it, such as move funds, before they go overdrawn and are subjected to a fee. A second text is sent once a customer has gone over their limit, and a grace period is allowed in which the customer can rectify the situation before a charge is implemented.
Lloyds are also slashing interest on overdrafts and, in line with new rules regarding unfair bank charges, are lowering their administration fee for exceeding overdraft limits, bouncing cheques and getting returned Direct Debits from £35 to £20.
Lloyds TSB’s 11 million customers can already be sent a weekly text message informing them of their current balance, and the new ‘text limit’ service will be available for a free trial run from 2 November.
While this could offer advantages for those who have no other forms of access to their account information, Samantha Owens, spokesperson for Moneyfacts.co.uk, has reservations:
“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.â€
In total, UK banks have refunded their customers with a massive £2.6 billion since the start of the unfair bank charges campaign last year, and this figure continues to rise. Lloyds TSB alone has returned £36 million to its customers, despite the fact that it claims that just one in five of them pay such fees.
