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Lloyds and Halifax change credit card repayment rules – make sure you don't overpay

If you've set up a direct debit to pay off your Lloyds, Halifax or Bank of Scotland credit card and then make a one-off additional payment, your direct debit now WON'T be adjusted – so make sure you don't overpay.

Lloyds Banking Group – which operates the three banks – introduced the changes yesterday (Thursday 27 September). Direct debit amounts will no longer be reduced if you make a manual payment before your direct debit is due. 

Lloyds Banking Group says it's made the changes to help customers, but the shake-up has caused confusion, with fears some will end up overpaying their cards or even racking up overdraft fees as a result.

For more info on how credit cards work and our top picks, see our Credit Cards section, including Balance Transfer Credit Cards and Best 0% Credit Cards.

What has changed?

Lloyds, Halifax and Bank of Scotland have changed the way direct debits are processed for their credit card customers.

Previously, additional payments towards a customer's credit card balance made before the direct debit payment was due would reduce the regular direct debit amount taken.

But from now on, direct debit amounts WON'T be reduced by any additional payments made.

Lloyds Banking Group says it informed customers of these changes in July, mailed reminders to customers and also texted some customers on Thursday to remind them.

The new Lloyds Banking Group policy isn't typical across the industry. Major banks including Barclays, NatWest, RBS and Santander told us they deduct the amount a customer has manually paid from their direct debit, unless the manual payment is made within a few days of the direct debit being taken.

'How many people will be caught out?'

Some credit card customers have been left confused by the changes and want Lloyds Banking Group to reverse the new rules.

MoneySaver Sue, who has a Lloyds credit card, received a letter about the changes this week after missing the July correspondence. She says she was almost caught out by the changes after paying off her credit card in full early.

"How embarrassing it would have been when they attempted to remove £1,785 from my bank account with insufficient funds," she said. "How many other people will be caught out and will have to claw their own money back?"

Others on social media also expressed confusion at the changes:

How to avoid paying twice – and what to do if you do

If you have a direct debit set up to pay off your card and then make a manual repayment, there's a risk you could overpay when the direct debit comes out.

First do the maths to work out if you will overpay. If you will, to avoid it Lloyds says you'll need to cancel your direct debit, then set it up again if required at a later date. 

If you do this though make sure you're absolutely certain you've made the minimum repayment required, and if possible have paid the balance off in full, to avoid fees and unexpected interest.

If you do accidentally overpay because you've made a manual payment and then not cancelled the direct debit, you'll need to contact your bank and ask for the money to be returned. This won't be done automatically – but if you ask, all three banks will return the money.

What does Lloyds Banking Group say?

A Lloyds Banking Group spokesperson said: "As part of our commitment as a responsible lender, we have changed the way Lloyds, Halifax and Bank of Scotland credit card customers' payments are processed.

"From now on, if a customer makes a payment to their credit card account, it will no longer reduce their direct debit amount but will count as an additional payment, allowing them to reduce their balance more quickly."

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