22 June 2007
Students who are coming up to their graduation are being advised to check their graduate account details after HSBC announced that from August, all graduate accounts will have overdraft charges of 9.9%.
Traditionally, graduate accounts offer interest-free overdrafts up to a given limit - 1,500 for example - which is then reduced over the following three years to allow new graduates to find their feet financially.
The new 9.9% rate means that an ex-student who has maxed out their 1,500 overdraft will now be paying 142.40 per year in interest. The only way for graduates to avoid this charge is to sign up to the premium account for 9.95 per month, which would save them 22.40 per year if they remained at 1,500 overdrawn.
Unsurprisingly, this decision has been slammed by students' campaign groups. A spokesperson for the National Union of Students told the Times: "The period after graduating is tough for a lot of graduates and given the debt students are now saddled with its pretty alarming to think students are going to be hit with a big charge."
Mark Dampier, Head of Research and Hargreaves Lansdown, an independent financial adviser, said: "There is an awful apathy level with these things and HSBC will have worked out how many people will leave and how many people will stay and pay up."
Graduates are advised to switch their account to ensure they have a better deal, with Barclays, NatWest, the Royal Bank of Scotland and Lloyds TSB all offering third-year students an interest-free overdraft of 2,000 when they graduate, falling to 500 after three years.
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