April 21, 2010
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News: Lloyds Raising Fees and Interest
Banks continue to find new ways to increase earnings while credit card customers continue to be the mark. Great Britain's premier lender, Lloyds TSB announced that its credit card users as well as the Airmiles Duo users will be facing new fees and higher interest. Lloyds TSB is Britain's largest bank and as a result of the Government's Asset Protection Scheme, the British government owns 41 percent of the bank. The bank announced several new rules which will affect customers who use their credit card for cash withdrawals as well as other provisions.
Beginning June 4th, customers who use their credit card to obtain a cash withdrawal will pay a fee of £3; up from the current rate of £2.50. In U.S. dollars that amounts to approximately $4.62; nearly double the fee that most U.S. card companies charge their customers. More disturbing for Lloyds' credit card customers is the loss of their interest free period. Currently Lloyds' cardholders are not charged interest on purchases for 56 days. However, under the terms of the new rules, if the customer does not pay their balance in full after the 56 days, interest is charged retroactive to the date of the card transaction. If the balance has not been paid in full on the previous monthly statement, interest is charged immediately on any future purchase.
Experts are not certain why the big bank made the decision to raise rates and fees, however, unlike most U.S. lenders, Lloyds will not charge credit card users fees on missed payments or declined transactions. Furthermore, Lloyds will change the way it calculates minimum payment due. Minimum payments are currently 2 percent of the balance owed. The new rules modify that so that customers will pay the greater of either 2 percent of the balance or interest and fees plus 0.5 percent. The bank says all customers have already been notified of the changes and that if they continue to pay in full each month, the new rules will have no effect.