Warning: Lloyds, Halifax or Bank of Scotland customer? Your overdraft rate may be raised to 50% this week – who's affected and full help

Lloyds Banking Group, which owns all three brands, said most customers would be charged the same or less – but others will pay more, and some Club Lloyds customers will see their rate nearly double, from 27.5% to 49.9%.

The changes have been rolled out in stages, as follows:

• If your rate is going up, you will have had an increase in August 2024 and you'll now see a further rise on Friday 31 January 2025. Those whose rates were being increased were first put on a temporary 34.9% or 44.9% rate in August 2024 in order to "limit the impact" of the overall rise. Those temporary rates are now expiring – depending on which one you were on, your rate will rise again to either 39.9% or 49.9% on Friday 31 January.

• If your rate is going down, this will have come into effect last year. The Group told us it started writing to affected customers in mid-May 2024 to give them seven days' notice of the change.

Lloyds, Halifax and Bank of Scotland's new overdraft rates explained

Here's how the banks' overdraft rates are changing:

Which rate you get is based on an "affordability assessment", including your credit history and how you use any accounts you have with the banks – though the group said its standard rate would remain at 39.9%.

The group told us that "the vast majority" of those with an arranged overdraft will see their rate stay the same or fall – but refused to say how many customers would have their rate increased.

These changes won't affect you if you don't have an overdraft set up on your account, though if you do decide to add one in future, it'll be at one of the four new rates set out above (19.9%, 29.9%, 39.9% or 49.9%).

How to check your overdraft interest rate

If your rate is changing, you should have got a letter, online message or text about this – so have a look through your inboxes. Alternatively, you can contact your bank using the links below to double check.

You should be able to find your current rate:

• On your latest monthly current account statement. It should be shown under the 'Your interest rates' section on the first page.

• By contacting your bank directly. You can call or chat with Lloyds, Halifax, or Bank of Scotland.

• In the latest version of the Lloyds app. From the Summary screen, tap on your current account then tap the ⓘ at the top of the screen, then select 'About your arranged overdraft'. This process won't work for the Halifax and Bank of Scotland apps, but you should still be able to access your latest statement through them.

Cut overdraft costs – can you get it to 0%?

We've set out your options in brief below – for step-by-step help, you can also check out Martin's debt-busting masterclass from last week's email or see our full guide to Cutting overdraft costs.

• Check if you can switch to an account with an interest-free overdraft. If you're not desperate to stay with Lloyds, Halifax or Bank of Scotland, you may be better off switching to a bank with a 0% overdraft.
  
  For example, First Direct offers many a £250 0% overdraft (39.9% above), though your acceptance depends on your credit history. You can use the overdraft eligibility checker on its site before applying to see if you're likely to get it. Switchers can also get a free £175.

• Alternatively, try a specialist 0% 'money transfer' credit card. This is where, for a one-off fee of about 4% of the amount you're transferring, the card pays cash into your bank account. You can use this to clear your overdraft, so you owe the card instead at 0%. You can currently get up to 12 months at 0%. For a full rundown, see our Money transfer cards guide.

• If your rate is going up and you're struggling, talk to your bank – and complain if necessary. The Financial Conduct Authority (the banking regulator) has said it expects banks to take "positive steps" to help people in financial difficulty as a result of overdraft charges – this could include waiving or reducing your overdraft interest, or letting you repay it as a loan with a lower rate.
  
  In the first instance, contact Lloyds, Halifax, or Bank of Scotland directly to see how they can help. If that doesn't work, raise a formal complaint – explain that you're being trapped in debt at a higher interest rate without being given alternatives to get out of it, and that this could be a breach of the regulator's Consumer Duty rules (these require banks to treat customers fairly and deliver good outcomes).
  
  If your bank can't or won't help, you can then escalate your complaint to the free Financial Ombudsman. We've step-by-step help, including a template letter you can use, in our Overdraft cost-cutting guide.

What to do if you're struggling with debt

If you're struggling, you can find full help in our Debt crisis help guide, though first there are three questions you should ask yourself...

• Do you struggle to meet minimum monthly payments?

• Is your total debt (not mortgage/student loan) over one year's salary?

• Do you have sleepless nights or depression/anxiety over debt?

If you answer 'yes' to any of these, the solutions in our guide may not be suitable. Instead you should consider getting free, one-to-one debt-counselling help from CAP (which gives emotional support too), Citizens Advice, National Debtline, or StepChange.

They're there to help, not judge. The most common thing we hear after is: "I finally got a good night's sleep". Just go for it, read inspiring stories in our Debt-free wannabe forum board, and also see our Mental Health & Debt guide.