Can I claim for overdraft interest?

[zuzubing]

Is Lloyds TSB entitled to charge me interest on my overdraft or is this something I can cliam back? Or am I only allowed to claim back penalty charges when I have gone over the agreed overdraft limit?

[Don Quioxte]

No you cannot claim back authorised overdraft interest as this forms a core term of the agreement/contract you have with your bank. That is to say that they are providing you with lending based upon an agreed service charge that cannot be construied as a penalty.

Even the unauthorised interest on the overdraft effecively forms a core term - though there may be redress for claiming part or all of this back if it is charges that have taken you into the bracket of the higher APR - i.e if it was a £30 charge that took you over your limit or a number of charges made up all or a portion of the overlimit amount then for sure you could claim back the interest that was paid at the higher APR..

if that makes sense?

[jonni2bad]

Originally Posted by zuzubing

....Or am I only allowed to claim back penalty charges when I have gone over the agreed overdraft limit?

You claim all charges back, regardless of being overdarwn or not.

The interest reclaimable, as mentioned above, is harder to determine.

Some statement break these figures down, others do not, so you would have to know that you were only claiming for the interest that occured solely due to the charges... quite tricky really.

If it looks difficult, there is nothing 'wrong' with not claiming this part back, as it will probably be a small figure anyway.

If you claim goes all the way to court, then you can look at a more substantial claim for interest on each charge imposed - but let's not get ahead of ourselves....

Does that help you?

[zuzubing]

MAny thanks to your quick responses. How do I go about calculating the proportion of interest which relates solely to the penalty charges?

[jonni2bad]

Ahh - the million dollar question.

You would need to know the interest rate that applied at the time of each charge, going back years of course. This would change, probably...

You would then also need to know the difference in rates between standard overdraft, and over-limit. With that info, you would begin to calculate the parts of each interest charge ever made when a charge had occured, and then separate them into what they were entitled to charge you, and what was solely due to the charge going on top.

Do you see where this is going?

All this for pence? Yes, your pence, but you have to ask if it is really worth it.

Vamps spreadsheet does at least attempt to address the issue in another way - have a look at that (in templates) as it might be your best bet.

[zuzubing]

Thank you for that detailed information - it has been of great use!