Lloyds Bank confirms £50 rule change to hit THOUSANDS of bank accounts next month

The change means customers who go even slightly overdrawn will face immediate interest charges on every penny borrowed.

Additionally, the bank is discontinuing its Select account completely, with existing holders being transferred to the basic Classic account, which carries no overdraft cushion.

The £50 buffer previously served as a valuable safety net for customers who occasionally slipped into the red, allowing them to borrow small amounts without incurring any costs while awaiting their next payday.

Once the changes take effect, daily interest will be applied from the very first pound borrowed on an arranged overdraft.

A Lloyds spokesperson said: "At the moment, if a customer has an overdraft they can have different interest-free amounts depending on what type of account they have, and we're moving to a more consistent approach, so customers with similar accounts have the same interest free amounts."

The bank confirmed it is reaching out to affected customers directly to explain the modifications.

The packaged accounts affected carry monthly fees ranging from £11.50 to £22.50 in exchange for bundled perks such as travel cover and breakdown assistance.

For example, the Silver tier, priced at £11.50 monthly, provides UK and European travel insurance, AA breakdown cover and mobile phone protection.

At £16.95 per month, the Gold account offers worldwide coverage, though Lloyds has already stopped accepting new applications for this product.

The Platinum option represents the premium tier at £22.50 monthly, featuring worldwide family travel insurance alongside an annual lifestyle benefit like streaming subscriptions or cinema passes.

Select account holders will be migrated to the fee-free Classic account, losing all additional benefits in the process. Club Lloyds account holders remain unaffected by these changes, continuing to benefit from a £100 interest-free overdraft allowance.

The modifications apply exclusively to packaged account customers and those with Select accounts.

For customers who regularly dip into their overdraft, even by modest amounts, the removal of the £50 cushion effectively ends what amounted to a complimentary short-term borrowing facility.

Those paying monthly fees for packaged accounts may wish to reconsider whether the remaining benefits justify the cost, particularly if they do not regularly utilise the travel insurance, breakdown assistance or phone cover included in their package.