Lloyds Banking Group has announced an overhaul of its overdraft charges that it says will improve the finances of the majority of its current account customers.

But the new measures could result in far higher costs for some Lloyds and Halifax customers - and make these banks some of the most expensive for certain types of borrower.

From November, Lloyds, Halifax and Bank of Scotland will streamline their charges so that customers will pay 1p a day for every £7 of planned overdraft usage. This will be charged at the end of each day.

It may sound like a small amount, but Andrew Hagger, founder of Moneycomms, the personal finance website, calculates that this will equate to an annual rate of 52pc. Other providers charge just 18pc on planned borrowing.

The banking group is also scrapping unauthorised overdraft fees altogether, which can reach £10 a day plus interest plus a £6 monthly fee.

Customers may still be able to dip into their overdraft without being charged, but this will be at Lloyds's discretion. A spokesman confirmed there is no guarantee borrowers will be allowed.

Fees for missed payments will also be ditched so customers will no longer be charged when payments, such as direct debits, bounce back due to lack of funds in the account. Customers can also get text alerts when their balance gets low.

.........Mr Hagger approved of Lloyds scrapping fees for unauthorised borrowing. But he said the new charges will not be the cheapest for all customers and the 1p per £7 borrowed was "arbitrary".

"Lloyds has obviously worked out it needs to charge this amount to fund this part of the business", he said.

He highlighted that the Financial Conduct Authority is in the process of reviewing short term credit and he's sure Lloyds won't be the last bank to make changes to its overdraft facilities.

Source: http://www.telegraph.co.uk/personal-banking/savings/lloyds-shakes-overdraft-fees-still-charges-borrowers-52pc/