Cost of living – frequently asked questions

If you’re concerned about the rising cost of living, you’re not alone. Here you’ll find helpful answers to some commonly asked questions that should help you to:

  • Manage your bills.
  • Work out how higher interest rates might affect you.

Why are costs rising?

  • There’s no single reason the cost of living has increased. It’s more a combination of things, including:

    • Unprecedented social and economic upheaval following the coronavirus pandemic.
    • Worldwide demand for oil and gas to power homes, manufacturing and distribution.
    • The war in Ukraine reducing the availability of fuel and grain.
    • Political and economic uncertainty.

    This affects the cost of everything, from everyday essentials to household bills. But most people haven’t seen an increase in their wages, so naturally things feel less comfortable than they did.

    It’s likely that the rate of inflation will peak at a certain point, but that doesn’t mean prices will drop. They may just increase more slowly in future.

    To help you budget and borrow more effectively over the coming months, you might like to explore some of our money management guides.

  • The Bank of England defines inflation as:

    ‘The term we use to describe rising prices. How quickly prices go up is called the rate of inflation’.

    While inflation is high, the faster prices and the overall cost of living will rise.

    The buying power  of your savings will also reduce, because your money won’t go as far if you were to spend it. Our guide to inflation tells you more and how to work out the impact on your savings.

    It’s also useful to know, inflation can also increase the interest rate you earn on savings.

    Measuring the rate of inflation

    The Office of National Statistics (ONS) holds a database charting the cost of over 700 common goods and services which consumers might put into their shopping ‘basket’.

    This is updated monthly, creating a Consumer Prices Index (CPI). The change in price over the course of a year gives us the rate of inflation.

    Managing inflation

    The Bank of England aims to keep the rate of inflation stable, at around 2% each year, although at the moment, it’s much higher than that.

    The main way they can control inflation is through interest. That’s the amount of money you pay when you borrow, or earn when you save. In very simple terms:

    When interest rates are high:

    • People are encouraged to save by earning more interest.
    • It costs more to borrow, meaning people tend to spend less.
    • Inflation drops and price rises start to slow.

    When interest rates are low:

    • There’s less incentive to save money.
    • Borrowing is cheaper, so people are likely to spend more.
    • The rate of inflation starts to rise.

    While the rate of inflation is high, your money won't go as far, so it’s important to budget and borrow more carefully. For tips, you might like to explore our money management guides.

I need help with my borrowing

  • Experiencing financial difficulty?

    If you find that you’re struggling to repay your overdraft, it’s important to seek help as soon as possible. We’re by your side to offer support – learn how we can help.

    An arranged overdraft can be helpful as a short-term safety-net, helping you to manage unexpected costs, or tide you over until your next pay-day.

    It’s important to know that you could be charged daily interest, as detailed in the terms and conditions of your current account.

    Short-term borrowing

    If you dip into your overdraft, we won’t charge you any interest if you bring your account back into credit by the end of the same day. You can do that by moving money from another account, or paying money in at a branch.

    Longer-term borrowing

    An overdraft may not be the most cost-effective way to borrow over an extended period. You can get an idea about the costs using our overdraft calculator.

    If you need to borrow money and spread your repayments, you might like to explore other borrowing options.

    Managing your overdraft

    Manage your overdraft using Internet Banking or the Mobile Banking app, including the options to:

    • Increase or decrease your overdraft limit.
    • Cancel an arranged overdraft you’re not using.
    • Internet Banking: From the account menu select ‘Need help with your debt or payments?’.
    • Mobile Banking app: Log on to the app, then use the three dot ‘More’ menu to find ‘Need help with your debt or payments?'.
  • Experiencing financial difficulty?

    If you find that you’re struggling to make your credit card payments, it’s important to seek help as soon as possible. We’re by your side to offer support – learn how we can help.

    While there’s an outstanding balance on your credit card, you need to make at least the minimum monthly payments.

    It’s important to make payments on time to avoid:

    Ideally, you should try to repay as much as you can, wherever possible, to reduce your balance and the amount of any interest you pay overall. This could also help you avoid falling into persistent debt.

    Managing your credit card

    Using Internet Banking or the Mobile Banking app, you can manage your loan online. Both include the option to access support:

    Internet Banking: From the account menu select ‘Need help with your debt or payments?’.

    Mobile Banking app: Log on to the app, then use the three dot ‘More’ menu to find ‘Need help with your debt or payments?'.

  • Experiencing financial difficulty?

    If you find that you’re struggling to make your personal loan payments, it’s important to seek help as soon as possible. We’re by your side to offer support – learn how we can help.

    Loans offer a structured way to borrow, with regular monthly payments and a fixed term.

    If your interest rates are fixed, your monthly loan repayments will be too. That means it’s easier to keep track and understand your borrowing costs.

    Some lenders also offer personal loans with variable interest rates. If you select one of those, just be aware that your monthly payments could change over time.

    Cutting the costs

    You may be able to make overpayments on some loans without early repayment charges. This could reduce the term and amount of interest you’ll pay overall.

    Check your personal loan account terms and conditions for details.

    Need a short break?

    Lloyds Bank customers may be able to request up to two loan repayment holidays each year, depending on approval. Just be aware you’ll pay more interest overall, and your loan term may be increased.

    Managing your loan

    Using Internet Banking or the Mobile Banking app, you can manage your loan online. Both include the option to access support:

    Internet Banking: From the account menu select ‘Need help with your debt or payments?’.

    Mobile Banking app: Log on to the app, then use the three dot ‘More’ menu to find ‘Need help with your debt or payments?'.

  • Experiencing financial difficulty?

    If you find that you’re struggling to make your mortgage payments, it’s important to seek help as soon as possible. We’re by your side to offer support – learn how we can help.

    You can also get online support with your mortgage. Fill in a short form to get started.

    Mortgages offer a structured way to borrow, with monthly repayments that could be fixed or variable. 

    If you have a fixed interest rate, your monthly mortgage payments will be fixed too. That means it’s easier to keep track and understand your borrowing costs, at least until your fixed rate runs out.

    If your mortgage is on a variable interest rate, be aware that your monthly payments could change over time. To understand how changes in the Bank of England base rate might affect your mortgage, try our base rate calculator.

    It’s important to know, if you don’t keep up with your repayments you could lose your home.

    Cutting the costs

    You may be able to make overpayments on some mortgages without receiving early repayment charges. This could reduce the term and amount of interest you’ll pay overall.

    Check your mortgage account terms and conditions for details.

    Switching to a new mortgage deal

    If your current Lloyds mortgage is coming to an end, here’s the quickest way to set up your new deal.

    Need a short break?

    Lloyds Bank customers may be able to request a mortgage repayment holiday, depending on approval. Just be aware the interest will still be added to your account so the amount you owe overall will increase.

    Managing your mortgage

    Using Internet Banking or the Mobile Banking app, you can manage your mortgage online, including the option to access support:

    Internet Banking: From the account menu select ‘Need help with your debt or payments?’.

    Mobile Banking app: Log on to the app, then use the three dot ‘More’ menu to find ‘Need help with your debt or payments?'

I need help with budgeting

  • While the increasing cost of living is putting pressure on your finances, it could help to plan your spending. Keep closer track of what’s coming in and going out.

    • A budget isn’t just for people trying to manage debt.
    • The aim isn't to restrict your freedom, but to help you make better spending choices.
    • Making the most of your current earnings could be easier than you’d expect.

    You’ll find useful tools  and tips from  our money management page, including a guide to budgeting and our handy budget calculator.

    Having fewer money worries is the main benefit, but by following a budget you could:

    • Avoid excessive and persistent debt, or future financial difficulties.
    • Build your savings, making it easier to manage unexpected challenges.
    • Avoid making impulsive purchases.
    • Repay existing debts faster, saving on borrowing costs.
    • Start a habit of saving or investing for your future needs.
    • Have money saved to take advantage of any price reductions or offers. 
    • Feel less stressed and not argue about money. 
    • Feel more in control.

    It’s worth reviewing your budget each time:

    • Your income increases or decreases.
    • Your regular costs increase or decrease.
    • You’re planning a large purchase or expense.
    • You’ve paid off a debt – how will you put any extra money to good use?
  • You’ll find useful tools and tips on our money management page, including a guide on how to manage your bills.

    You can also use our Eco Home Tool to show you how much money you could save by making improvements to the energy efficiency in your home.

    If you are struggling to manage your household bills, it’s important to seek help as soon as possible. We’re by your side to offer support – learn how we can help.

    You can also find out about organisations who can offer free independent help and advice.

Government support

Support available

Money Worries

If you are struggling with your finances, or worried about the increased cost of living, you are not alone.

We are here to help you get back on track.

Money management

We’re by your side if you need help and guidance to manage the increasing cost of living. From day to day budgeting to planning for the future, we have information, tips and tools to support you.

Important legal information

To use our Mobile Banking app you need to have a valid phone number registered to your account. Available to UK personal Internet Banking customers and Internet Banking customers with accounts held in Jersey, the Bailiwick of Guernsey or the Isle of Man or you can register for the first time in the app. Our app is available to iOS and Android users only and minimum operating systems apply, so check the App Store or Google Play for details. Device registration required. The app doesn't work on jailbroken or rooted devices. Terms and conditions apply.

Page last updated: November 2022.