Major financial institution launches free spending overseas for some prospects… but in addition ups charges

Some Lloyds Bank customers will no longer pay fees on foreign currency transactions or cash withdrawals when using their debit cards abroad.

Customers with a Club Lloyds account will be able to use their Lloyds debit card to make purchases or withdraw cash anywhere in the world, free of charge, from today.

It joins the likes of First Direct, Chase, Starling and Monzo, which also offer fee-free spending abroad. 

It is the latest move from Lloyds to compete with challenger banks. It had previously been running a £175 switching deal between February and the start of April.

Unlike these accounts though, a Club Lloyds account is not free – though it does come with other perks which may make the fee worth it, if you use them. 

Perk: Club Lloyds customers will now be able to use their debit cards to spend and withdraw cash abroad without incurring fees – but the monthly charge for the account is going up

How much is a Club Lloyds account? 

Currently, Club Lloyds customers pay a £3 monthly fee for the basic Club Lloyds account. 

But as part of the changes announced today, this will rise to £5 from 2 June.

The monthly fee is waived if you deposit £2,000 or more into the account each month, however. 

It means that most customers would need to have their salary paid into the Club Lloyds account to hit the threshold, and have the £5 monthly fee waived.

If they do not meet the £2,000 threshold, customers could end up paying an extra £24 a year for the account when the £5 monthly fee kicks in. 

So, is it worth it? On top of the fee-free spending abroad perks, Club Lloyds comes with other benefits.

What perks do you get with Club Lloyds?

Once someone becomes a Club Lloyds banking customer, they can choose from a range of benefits each year.

These include a 12-month subscription to Disney+, or a choice of six Vue or Odeon cinema tickets, a magazine subscription, or a digital Coffee Club and Gourmet Society membership.

A 12-month subscription to the Disney+ standard plan with ads is worth £4.99 a month, or £59.88 per year.

Meanwhile, a Vue cinema ticket typically costs between £5.99 to £10.99 depending on time and location. This could equate to up to £65.94 of savings.

There is also the possibility of earning up to £90 in in-credit interest each year.

Lloyds pays 1.5 per cent on anything up to £4,000 and then pays 3 per cent on balances between £4,000 and £5,000.

The fee-free spending abroad will also apply to Club Lloyds Platinum and Club Lloyds Silver accounts. 

But these come with more sizable monthly costs, of £22.50 and £11.50 respectively, which cannot be waived by depositing £2,000 a month in the account.

A customer considering one of these accounts would need to consider whether they would make good use of the benefits on offer with these accounts to justify the higher fees.