HSBC scraps free overdrafts for this year's graduates

Compound_2 · 17 June 2007 at 2:06AM

Last year, HSBC was in the news for its new policy on overdrafts, stopping customers from permanently living in them. This year, it looks like they will be extending this to graduates. The Graduate Banking section of its website says:

The HSBC Graduate Service is currently closed to new applications. There will be a revised Graduate Service available in the near future. In the interim, you may want to consider Graduate Plus or the HSBC Bank Account.

Clicking on the ‘interest rates’ link in the current accounts ‘useful links’ box, and opening the relevant price list reveals what they plan for the Graduate Bank Account.

For accounts opened up to 31 May 2007, the usual reducing-by-year interest-free amounts still apply.
For accounts opened from 16 July 2007:

The overdraft rate is 9.9% EAR variable on all balances.

Reducing-by-year interest-free amounts are still available on the Graduate Plus Bank Account, but that has a £9.95 monthly fee!

Final year HSBC students should start making plans to bring up their balance to nil, and then switch to the best Graduate Account recommended by Martin. However, there may be some delay opening the new account, as a degree certificate and job offer may be required. HSBC students not graduating this year may wish to switch soon: this will allow an automatic graduate upgrade at their new bank.

xycom1 · 17 June 2007 at 8:24AM

I switched to Graduate Plus last month (I graduated last year and my free overdraft is due to reduce next month), but I did it because it gets me an interest rate reduction on my mortgage which works out as an interest saving greater than the £9.95 per month, so effectively I get travel insurance (which I'll never use) for free. :laugh:

lellie · 17 June 2007 at 1:44PM

ach that doesn't sound so good.. I'm graduating this year and was expected to be upgraded to the graduate account and have reducing free overdrafts.. hmm..

Blacksheep1979 · 17 June 2007 at 2:35PM

Well I have the money - but I would far rather keep it earning interest than give it back to this bunch of money grabbers. Will be leaving quick smart if they don't sort this out.

morg_monster · 17 June 2007 at 2:55PM

this is SO cheeky. Presumably you all applied for the account before you started uni BECAUSE of the reducing interest free overdraft etc. You would never have gone for it if you knew your overdraft would be 9.9% as soon as you left uni!!! this is crazy - there are loans with lower interest and other banks with 0% or lower % overdrafts. They know it takes a little while to get back in the black after finishing uni - no matter what your first job is.
Surely they can't just pull the rug out from under you now? It would be much fairer to say - "for all new applicants to the STUDENT account, their graduate account terms will be such-and-such" instead. I can't help but feel they see you guys as a captive market and are turning the screw. They always used to say student accounts were so valuable because you turn into lifelong customers - why would they do this?! Maybe because they see consumers getting increasingly savvy and not having that loyalty we used to, thanks to websites like MSE!
Vote with your feet chaps, I'm sure you can find a lower rate elsewhere while you are paying it off. A&L is a start although its 0% may not cover all of your overdraft.

[I got a letter this week telling me my HSBC grad account had ended this month, 4 yrs after i graduated, now my overdraft is 18.8%!!!!! thank god i haven't used the account in 1 year since I moved to A&L]

melancholly · 17 June 2007 at 4:14PM

might be worth checking if this applies to people who have student accounts to be automatically coverted into graduate accounts or whether it is just for new people that apply as graduates...

i just find it so daft that they would do this as it will encourage so many people to change banks and leave them (although that lack of logic probably means it's completely true!)

TeaBoy_2 · 17 June 2007 at 7:40PM

the cheeky bankers. i just graduated this year. when does my account change to graduate account? i guess i should go in and change it before 16 July.

Compound_2 · 18 June 2007 at 2:09AM

It does seems strange that 2006 graduates will get free banking until Summer 2008, but 2007 graduates lose it in Summer 2007. You would think that they’d at least offer a 1 year free deal, consistent with the worst accounts of their competitors. This would also follow a pattern of phasing out, as the 2006 two-year deal replaced the old deal which gave at least 3 years (still available on Graduate Plus).

In the case of postgraduates, there is scope for making a mis-selling complaint, to revert the account to the old Graduate status. The website advises switching Graduate Accounts back to Student Accounts, and branch staff would no doubt assure you that you’ll subsequently get the free graduate years in full. But now you’ll get nothing from July 2007, but if you’d stayed on the Graduate Service you’d get £1000 for the second year after the first degree.

Although HSBC graduates have recently received notification of their annual reductions as of mid-July, no graduands have reported receiving anything. It will be interesting to see how HSBC breaks the news to students; no doubt the Graduate package will be dressed up as a fantastic new deal. If HSBC is concerned about losing business, conversions may be delayed but for a 16 July start notifications should be in the mail. People should complain if they are not given notice as per the Banking Code:

6.4 If the change is to your disadvantage, we will tell you about it personally at least 30 days before we make the change. At any time up to 60 days from the date of the notice you may, without notice, switch your account or close it without having to pay any extra charges or interest for doing this.

If you have the money in an ISA or Regular Savings Account, any delay with getting an overdraft elsewhere means you’ll have to withdraw money from the high interest accounts, losing the subscription allowances – you can’t top up once you’ve got your new free overdraft.

karl_a · 18 June 2007 at 11:55PM

So which is the best graduate account to switch to?
I was relying on still having my interest free overdraft for the next few years.

Meatballs · 19 June 2007 at 12:24AM

Will be interesting to see how this pans out will be the first time I've had to change my current account. Maybe I should open up a RBS one now, although I guess it would be easier to get my existing Lloyds current account converted.

Any disadvantages to having lots of current accounts open? I already have 3 and would probably try and keep my HSBC one open incase they have any good offers

danish · 19 June 2007 at 2:36PM

As a student graduating this year with a HSBC student account, I have found it impossible to get clear information regarding what is happening to my account.

I enquired online a month ago and was told that my account would be switched in July, and that I should visit my branch for an exact date and t&cs.

At my first visit to a local branch I was told that I would be charged interest on my overdraft as soon as my account switches to a graduate account. I was informed that this would be on the 14th of July (what a birthday present!).

After reading this thread I though I would pop down to the branch where I opened my account and ask. I was informed that my account could switch over at any point during July as there are so many people it takes a while to batch process them (??). I was informed that I would not be charged interest just that the overdraft limit drops each year as expected.

So completely confused I have opened an account with a rival bank, who are offering an increase in my overdraft interest free (to pay for all those expenses you incur when starting a new job/moving). They did not require me to close the other student account although I did say I probably would after this month. Apart from being a better account I would advise people unsure of the situation like myself to open an account with another bank just in case HSBC does start charging interest on its overdraft.

Danish x

HSBC scraps free overdrafts for this year's graduates

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