MILLIONS of bank customers could pay more in current account charges despite an apparent climbdown on punitive overdraft fees last week.

Lloyds and Abbey have announced changes to their overdraft structure, preempting an Office of Fair Trading test case on the legality of the fees in January. They followed Halifax and Bank of Scotland, which implemented changes at the end of August. Alliance & Leicester is expected to follow suit next week, and Barclays said it will move before the end of the year.

Banks had been making up to £3.5 billion a year from unauthorised overdraft fees, according to the OFT – although it said it would back away from its High Court test case if there was evidence revenues had dropped due to the most recent changes.

However, critics argue that the changes are a smokescreen, as millions of customers may be worse off. Lisa Taylor of Moneyfacts, a comparison website, said: “The banks are looking to preempt the OFT with these changes, but on closer inspec-tion it appears that many customers will actually be worse off. In some cases the fees can be quite astronomical.”

Banks levy fees when you slip into the red without permission, or exceed your authorised overdraft limit. You typically pay a penalty of about £30 for exceeding the threshold, plus further charges for additional transactions while you are over the limit.

Even after last week’s changes, the fees could be double the amount you are overdrawn. If you went overdrawn by £30 for two days, and made no further transactions, you would pay £60.14 with Abbey, £58.14 with Halifax and £45.10 with Lloyds, says Moneyfacts.

Here, we detail the changes.

Lloyds

From November 2, Lloyds, which serves 11m current account customers, will cut unauthorised borrowing rates from 29.8% to the same level as on authorised overdrafts – between 10.4% and 19.3%, depending on what account you have. The bank is also changing its fee structure.

At the moment, it charges an “overdraft excess fee” of £30 when you stray over the limit. If another transaction takes you further into the red, you could be charged another £30 – but there is a maximum of three £30 charges a month. Lloyds also charges a “returned item fee”, where a direct debit or cheque bounces, of £35 with a maximum of three charges per day.

From November, however, a new flat fee of £15 will be introduced for each month that you use your overdraft facility. On top of that, you will be charged £6 a day for an unauthorised overdraft of up to £25, £15 for an excess of between £25 and £100, and £20 a day if your unauthorised overdraft is more than £100. You can be charged for a maximum of 10 days a month.

Lloyds claimed that most customers will be better off under the new system because fees for smaller transgressions have been chopped.

However, customers who exceed their limit by bigger amounts and longer periods could end up worse off. If a customer was over their limit by more than £100 for 10 days, for example, the maximum possible overdraft charge each month with the current system would be £90 while the new structure would allow charges of up to £215. This assumes there are no returned item fees.

Lloyds says that customers will not be overdrawn for long under the new system because it is introducing an alert service that will text your mobile when you are within £50 of your limit, and then again when you exceed it. However, this will cost £30 a year from January.

The bank will also offer a “grace period” until 3.30pm on the day you exceed your limit, in which to sort out your overdraft without incurring charges.

Abbey

Abbey has hiked its fees for using its overdraft facility from £20 a month to £25. It has also changed the fee for each transaction made over the limit from £30 to a tiered system depending on how far you are overdrawn.

From last Monday, customers who exceed their limit by up to £9.99 are charged a fee of £5, while anything up to £19.99 incurs a charge of £15. If you exceed your limit by up to £29.99, it costs £25 and anything over £30 costs you £35.

This would again make many customers who are overdrawn for longer periods worse off. Under the previous system, if you went overdrawn by £30 beyond your limit for two days, you would incur a charge of £50.04 – £20 for use of the overdraft, £30 for the overdrawn transaction and 4p interest at a rate of 28.7%.

Under the new system, you would pay £10 more because you would pay an additional £5 for the use of your overdraft and an additional £5 for making a £30 transaction over your limit.

Halifax

Since the beginning of this month the bank has stopped levying charges on charges. Anyone who goes over their agreed limit because of a £39 charge for a rejected transaction will not be hit by the standard £28 un-authorised-overdraft fee.

However, if the bank puts through a transaction that takes you over your limit, you will still get hit with a double whammy: a £30 transaction fee, plus the £28 fee for being overdrawn.

HSBC

From next month HSBC’s 3,500 ATM machines will warn customers if they are about to go overdrawn. It charges no fee for going overdrawn in the first six months of opening an account, after which a charge of £10 is levied for overdrafts between £11 and £24, with a fee of £25 thereafter. Unauthorised overdrafts of less than £10 incur no charge.

Its unauthorised overdraft rate is 18.8%, against Abbey’s 28.7% and 28.8% at HBOS.

TEXT ALERT WILL BE HANDY

SUZANNAH PIERSE is an IT analyst for a financial-services firm in London. She has recently moved to Lloyds TSB after getting a new job and said she is interested in subscribing to the text-alert service.

“I really need to stay on top of my finances,” she said. “Since last August my monthly mortgage repayments have increased by about £250 because of interest-rate rises so it’s pretty easy for me to go overdrawn by small amounts without realising it.

“If I had some warning I could transfer money or take cash to the bank quite easily.”

Pierse, 26, said she would not lose out on the new Lloyds overdraft structure as she is rarely overdrawn for more than a couple of days and only for very small amounts.

Her previous provider was NatWest. She said she incurred high charges with the bank. “At one point I went over my limit by 13p and was charged £30. I knew then I needed to switch,” she said.