HSBC gives in to graduates

In the past, the majority of High Street banks (including HSBC), have allowed students an interest-free overdraft of around £1,500 to £2,000 for the first 2 years after they graduate. However, last month, HSBC became the first High Street bank to commence charging interest on such an account, at 9.9%.

This prompted a strong reaction from University graduates and a campaign called “Stop the Great HSBC Graduate Rip-Off!” has been launched through Facebook, the social network.

However, HSBC have now decided to abandon plans to charge interest on graduate overdrafts following the campaign. HSBC commented that it has had to rethink its decision and showed that it is not “too big” to listen to its customers. The decision by HSBC emphasises the power of social networks. The social websites were unknown 2 years ago but are now extremely popular with students.

Gaining customers from the student age group is crucial to high street banks as they go on to reap profits when customers enter the jobs market. Britons are renowned for not switching banks later in life, even if they are not getting the best deal.

HSBC declared that the proposed fees were not unreasonable as several students and graduates were opening bank accounts to make use of free overdraft facilities. A spokesperson for HSBC said that they had taken the decision to freeze interest charging on 2007 graduates’ overdrafts up to £1,500 and added that it will refund any overdraft interest it charged during August.

A spokesperson for the NUS commented that they were pleased with HSBC’s decision as students often struggle in low-paid jobs upon graduation and can ill afford to get further into debt.

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