While this might be a blow for loyal customers, Lloyds is also scrapping foreign transaction fees on debit card payments, making it cheaper to use your account abroad.
Here, we reveal what’s changing, how Lloyds compares to other banks, and whether it’s worth switching.
Changes to Club Lloyds accounts
Club Lloyds is a fee-paying current account that offers an annual 'lifestyle benefit' and exclusive interest rates. From 2 June, the monthly fee for the account will increase from £3 to £5.
This fee is waived for customers who pay in at least £2,000 per month. The payment can come from a salary, pension, benefits, or multiple smaller deposits.
From 14 April, Lloyds is also removing foreign transaction fees charged on payments made abroad.
Club Lloyds customers currently pay a 2.99% foreign transaction fee plus a 50p foreign purchase fee. These charges will no longer apply when making debit card payments or withdrawing cash abroad, either in a foreign currency or pounds.
The changes won't affect exchange rates, and some ATM providers may still charge their own fees.
Finally, Lloyds is doubling its interest-free overdraft buffer from £50 to £100 from 14 April, meaning customers won’t be charged interest on the first £100 of their arranged overdraft.
Find out more:Why is the fee going up?
Lloyds Bank told Which? the increase reflects the rising cost of providing the account and its benefits, and is the first price change for eight years.
The bank said: ‘Our Club Lloyds range offers customers lifestyle benefits including Disney+, cinema tickets, and magazine subscriptions, as well as access to market-leading mortgage and savings rates.
'From 14 April, customers will be able to spend on their debit card abroad without any fees. Almost 90% of our customers get these benefits for free each month.’
Existing Club Lloyds customers will be notified from March, with at least two months’ notice given before the changes take effect.
Find out more:What else does Club Lloyds offer?
Club Lloyds customers can choose one lifestyle benefit per year from the following options:
The account also pays monthly credit interest on balances up to £5,000, as long as at least two direct debits are paid from the account each month.
Balances between £1 and £3,999.99 earn 1.50% AER (1.49% gross p.a.), while balances between £4,000 and £5,000 earn 3.00% AER (2.96% gross p.a.), both variable and paid monthly.
Club Lloyds customers can also open a Club Lloyds Monthly Saver, saving between £25 and £400 per month at a fixed interest rate of 6.25% gross/AER for 12 months. Withdrawals are fee-free, and the interest rate remains fixed throughout the term.
Find out moreIs Lloyds a good banking provider?
In our latest survey, Lloyds Bank received a 75% satisfaction score, placing it joint 7th out of 20 providers.
It earned five stars for its online banking service, and four stars for its mobile banking, branch service, contacting customer service and its application process.
In our review of online banking security, it ranked 7th out of 11 providers, scoring 69%.
Find out moreShould you switch your bank account?
If you're unhappy with the Club Lloyds changes, or you're looking for a better deal, several banks are offering cash incentives to switch.
Here’s the current deals on offer:
Co-operative BankNationwideFirst DirectAlternatively, if you like the sound of Club Lloyds perks, you might want to move your banking to Lloyds instead. Lloyds Bank is currently running its own switch deal worth £175 if you open a Club Lloyds account before 1 April.
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