Thousands of university graduates have been left out of pocket after HSBC broke a promise of interest-free overdrafts and started charging bank fees. High street bank HSBC offered students an overdraft of up to £1500 for the first 12 months after leaving university without being charged an incentive to bank with them. Under the scheme, the interest-free overdraft would be reduced to £1000 in the second year after graduation, and £500 by the third.
Reminding me of, and learning well from HSBC’s Household International, what you were told and what you signed are not always what you get. Just weeks after students received their degrees, the bank informed them that the interest-free scheme no longer applied. Instead, graduates have been hit with 9.9 per cent interest rate on their overdrafts, which can amount to £149 a year. The bank also offered them the option of joining a “premium” banking account, at the cost of £120 per year.
The about-face by HSBC has stunned graduates, many of whom have since switched banks in protest. The difference between doing so in the U.K. and doing so in the U.S. is quite simple. After HSBC changed Household International into HSBC Finance, borrowers found out they could not leave because their credit score may have been damaged or they could not refinance their mortgage. Students who left HSBC will probably never come back to HSBC which may be the smartest move of all.