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Lloyds introduces single overdraft rate

Lloyds Bank is radically changing its charges for overdrafts on 20 million accounts, introducing a flat fee of 1p for every £7 of overdraft used.

All existing charges for overdrafts will be abandoned in November. This move will leave nine out of 10 customers better off, the bank claims.This comes ahead of moves expected by the Financial Conduct Authority to cap “extortionate” fees for unplanned overdrafts.

Last year the Competition and Markets Authority completed a two-year probe into banking, in which it highlighted how the big banks make around £1.2bn a year from unarranged overdraft fees.