Student left perplexed after Lloyds Bank told him using his ‘free’ overdraft for three months would cost him £1.3BILLION
- Student sent baffling letter about the cost of his new ‘free’ overdraft facility
- Claims that branch staff told him it was a standard letter it sent to customers
- It says: ‘The total cost of credit for using your overdraft for 3 months is £12999999,804.74
A student was left baffled by a letter from his bank Lloyds stating that the cost of using his ‘free’ £500 overdraft would be £1.3billion.
Dan Foord then claims he was brushed off by branch staff when he took the letter in out of concern and says he was told it was just a standard letter it sends to anyone who arranges an overdraft.
The letter, seen by This is Money, says: ‘The total cost of credit for using your overdraft for 3 months is £1,299999,804.74.
‘This assumes you borrow the full amount of your overdraft for the full three month period and the daily overdraft fee does not change.’
Overdraft shock: A letter sent to a student Lloyds current account customer told him the cost of using the overdraft would be £1.3billion
Mr Foord was encouraged to open a Lloyds account by his mother who has been a customer with the bank for four decades.
At the end of his first year of university he decided to obtain an overdraft.
He says that after visiting his local branch to convert his account to a student one, he was directed to the main Oxford branch as a scanner wasn’t working.
When there, he was told a member of staff wasn’t available to change his account to a student one.
However, as an alternative, he could open a new account, this time as a student account.
Letter: Mr Foord was left baffled by the sum mentioned – and the subsequent handling of the matter by Lloyds branch staff
He did and was promised the fee-free overdraft of £500. However, the confusing letter puts the scary £1299999,804.74 figure in bold.
Although this is an extremely far-fetched number, it is likely to put the frighteners up anyone who is unfamiliar with how an overdraft works and worry them about the potential cost, especially when told it will be free.
A Lloyds spokesman investigated the case. It said: ‘We regret that an incorrect figure was used in this letter and we apologise to Mr Foord.
‘We have written to him to clarify the details of his account and offer him compensation.
‘Mr Foord has a student account which includes a fee-free planned overdraft so he will not be charged for using the £500 overdraft on his account.
‘Correct information about the cost of using an overdraft was supplied to Mr Foord at a number of points during the application process and in the supplementary documents we provided.’
Mr Foord has confirmed he has accepted £50 compensation. It remains unclear how the huge error in the letter occurred.
Lloyds offers a student account which customers can apply for a fee-free planned overdraft of up to £1,500 in years one to three, and up to £2,000 in years four to six.
For regular customers, it charges 1p for every £7 of overdraft usage per day.
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