HSBC to charge overdraft fees to new graduates
July 7, 2007
HSBC has announced that it will be scrapping an element of its free overdraft for students facility this year by adding an interest charge to the overdrafts of new graduates when they leave university later this year.
In the past HSBC, like other banks, has granted students a free overdraft facility whilst at university, and then granted them time to gradually pay off the overdraft after leaving university without charging any interest on the overdraft.
However, the bank will now be charging interest to students that leave university right away on their overdraft, and the interest charged will be nearly ten percent.
Prior to this students that left university were given a three year interest free period to repay the overdraft, and this facility will still be available – but only to graduates that open an upgraded account that will cost them nearly ten pounds a month.
Although no other banks have stated that they will be following in the footsteps of HSBC this year no banks have said that they have ruled out this move for the future, which means that more and more graduates could be hit with costly interest charges on their overdrafts as soon as they graduate from university. In its defence, the HSBC stated that it is trying to help new graduates to learn the financial implications of borrowing money.
One official from HSBC stated: ‘The new service is put together to create a more level playing field. We wanted customers to distinguish between being a student and graduate, because as the latter you are in a position to earn money. It softens the blow of realising the costs associated with borrowing, though we appreciate there is a risk that some students won’t bank with us anymore.’
Alan Wright
7th July 2007
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So much for the banks trying to help students!
They once coveted students as they were more than likely goig to be high earners that will make a profit for the bank over the course of their life but now with decreased loyalty and switching becoming prominent students will have to pay the price early.