Lloyds, Halifax and Bank of Scotland to cut overdraft rates for millions but hike them for others – here's what's happening and full help

The rate you get will be based on an "affordability assessment", including your credit history and how you use any accounts you have with the banks – though the Group says 29.9% will become its new standard rate, down from 39.9% previously. The £100 interest-free buffer on the Club Lloyds and Halifax Reward accounts will stay (you only pay overdraft rates above this).

You can find your current rate on your bank account statement, by searching 'Manage my overdraft' in the iPhone app, or just call or web chat with the bank.

Your bank will write to let you know if your rate is changing

Look out for a letter, email, text or online banking message over the coming days. If you don't get one it means nothing is changing. The changes will then be rolled out in stages, as follows:

• Those whose rates are going DOWN will see this almost immediately. You'll get seven days' notice, after which your rate will go down automatically. The banks started writing to customers last week, so you may have seen the change already.

  Previous rate	New rate
  19.9%	N/A - 19.9% is the lowest rate
  29.9%	19.9%
  39.9%	29.9% or 19.9%
  49.9%	39.9%, 29.9% or 19.9%

• If your rate is rising, you'll get 60 days' notice. This will then be staggered over several months. Here's how it'll work:

  Current rate	From August 2025 it'll rise to:	From February 2026 it'll rise again to:
  19.9%	24.9%	29.9%
  29.9%	34.9%	39.9%
  39.9%	44.9%	49.9%
  49.9%	N/A - 49.9% is the highest rate	N/A - 49.9% is the highest rate

Overdrafts are an expensive form of debt – if you go into one, even occasionally, try to cut it

There are many options that can help – from changing payment dates to talking to your bank – covered in our Nine ways to cut your overdraft costs guide. Here are some of the key ones:

• First Direct offers a £250 0% overdraft and pays you £175 to switch. First Direct offers many a £250 0% overdraft and pays you £175 to switch to it. So if your overdraft is under £400-ish, this could pay some off and ensure the rest is interest-free. However, above the £250 amount it charges 39.9%, so be careful beyond that.
  
  If you are switching to it, it won't automatically move your existing overdraft, see our how to move an overdraft help for what you need to do.

• Pay off your overdraft with a 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 14 months at 0%. For a full rundown, see our 0% money transfer cards guide.

• Treat paying off an overdraft like a loan. One of the problems with overdrafts is their open-ended nature: you can go in and out of it, making financial discipline really tough. So decide how much you want to clear, do a budget and treat it like a loan.
  
  For example, say you're £500 overdrawn – try to pay off £100 a month, so at the same point next month you'll be £400 overdrawn, and stick to the plan. It can help.

• 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).

Again there's far more help in our Cut your overdraft costs guide and if you have more widespread debt issues see our Debt help guide too.