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Lloyds joins crowd with new 40% overdraft rates

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The City regulator has stressed that seven out of 10 bank customers will be better off or unchanged as another big bank announces its new overdraft rates.Customers of Lloyds Banking Group will be charged "personalised" rates of up to 49.9% from April, but most will pay a rate of 39.9% to go into the red.The latter is the same rate as planned by many of the major High Street banks.The Financial Conduct Authority (FCA), which demanded changes from banks, said the new system was much simpler."Customers at some large banks were charged effective arranged overdraft rates in excess of 80% per year once fees and charges are factored in," the FCA said.
"Our changes expose the true cost of an overdraft. We have eliminated high prices for unarranged overdrafts. This will result in a fairer distribution of charges, helping vulnerable consumers."
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Banks and building societies will no longer be allowed to charge higher prices for unarranged overdrafts than for arranged overdrafts.The new rules, which come into force in April, require providers to charge a simple annual interest rate on all overdrafts and to get rid of fixed fees.
Most banks and building societies have chosen to set a rate very close to 40%.Lloyds Banking Group, which includes the Halifax brand, is no different, with the majority of its customers paying a new annual rate of 39.9% - in effect paying
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