Spotlight On: Lloyds TSB's new overdraft charges

The deal

Lloyds TSB is introducing a fixed £5 monthly charge if you go overdrawn from 2 December. Other penalty charges will be cut.

The good points

Anyone who goes into the red without telling the bank should end up being charged less as the existing £15 monthly penalty fee will be replaced by a £5 charge per month. There's also a £10 'buffer' so anyone who dips into the red by just a few quid won't incur penalties from December.

The bad points

People who use arranged overdrafts will also be charged the new £5 monthly fee. It means people who regularly use an arranged overdraft will be charged an extra £60 by the bank in a year.

Conclusion

This is the biggest reason yet to consider switching accounts. The cost of going £500 into the red for a month will soar from £8.04 now – including interest charges – to £13.04, making Lloyds TSB the most expensive place to have an agreed overdraft.