HSBC Graduate Overdraft - no longer interest-free!

matthewking26

I have an overdraft with HSBC and an A+L online account.
I was given a £500 o/d for the 1st year of uni, upped to £1000 for the 2nd then £1500 for the third.
After I graduated (in 2003) it stayed interest free for a year, then the interest free portion was reduced to £1000 for a year, then to £500 the year after that and then zero.
Their line was it gave me a chance to gradually reduce your overdraft.
It's still £1500 now but interest is around 18%. At my £1500 limit I was paying around £13 a month in interest, not a huge amount but annoying none the less. Don't worry too much if you're up to your limit, I was allowed to go up to £10 over my limit without incurring a fee, though they did advise that this was at their discretion. That discretion lasted a year then they told me they'd start charging if I went over. Luckily I only did that once and was charged a £25 "overdraft review fee"
I might be wrong but I don't think you have to clear your entire overdraft in the four weeks, just that it won't be interest free anymore.
I have a letter each year saying the overdraft has been reviewed and will stay the same for another year.
To save paying interest I took out a 0% virgin cc and transferred the £1500 so its interest free until next March, giving me chance to gradually pay it off whilst not paying interest to HSBC. I've kept the HSBC account as its online banking is much faster than Alliance and leicester, updating instantly or the next day where A+L can take a few days to update online (the worst thing about their account in my opinion) Plus its nice to have that £1500 buffer zone in emergencies, such as paying rent if I get paid late into A+L.

On the alliance and leicester front. When I took out their "overdraft matching service" they wrote saying they'd only match HSBCs £1500 overdraft if I could send in statements proving I had been in credit for at least 3 days in the last three months. As I was permanently in my overdraft I couldn't do this so they only gave me their minimum overdraft of £300, hence why I took out the 0% cc.

The other thing to be aware of if you change accounts is loan payment dates.
I have a HSBC loan, the payment used to come out of the HSBC current account and onto the loan on the 1st of each month after I got paid so no problem.
When I moved to A+L, the payment would take 4-5 working days to reach the loan, risking a late payment as I was paid on the last day of the month, not giving the money enough time to transfer to the HSBC loan for the payment day.
Luckily I was able to move the loan payment date to the 5th with HSBC but the adviser made it clear they would only move a payment date once during the term of the loan (5 years) so no more date changes in the future. Something to think about if you are changing account.
In my opinion HSBC are rubbish at interest rates but great at online banking.
Whereas A+L have great interest rates but their internet banking is pants. Depends what you need from a bank I suppose.

PS The graduate account terms and conditions were given to me back when I first got my student account telling me what would happen after I finished my degree

drginge

Yesterday I received a letter stating my overdraft had been reviewed and the total available will remain at £1750, though only the first £1500 will be interest free. This morning I received a letter, from a different HSBC address, stating my new overdraft facility comes into effect on 18th July and the interest free portion is now £1000 rather than £1500. What's going on?!

I went into my branch but "there's no one here who could deal with that try calling telephone banking". On the phone, the guy said they don't know what is happening and won't know anything until Monday! Apparently central finance are looking into it because every customer has been sent conflicting information, sounds to me like a complete mess. I don't blame the guys & girls on the customer facing side though, as usual they are always the last to know what their employer is up to!

Needless to say I'm in the process of finding a new graduate account

ellie_jane_2

Sounds like a big mess to me, anyways I am glad it has prompted me to find a new account, as imho 8.5% credit interest is a LOT better than 0.1%!

Good luck to everyone else, let me know if you find any more information!

scottishlass

ellie_jane wrote: »

Sounds like a big mess to me, anyways I am glad it has prompted me to find a new account, as imho 8.5% credit interest is a LOT better than 0.1%!

Good luck to everyone else, let me know if you find any more information!

The person I spoke to in the bank was really honest with me for once and owned up she knew nothing about anything that was going on and as far as she was aware according to my records my overdraft with the partial interest three bit would remain until next year. (She said she was going to look into it more incase anyone else went in asking but definitely a big mess)

She said there was no record of the second letter canceling my graduate account being sent out as far as she was aware it was 3 years before you loose the title although whilst I was there she did find the Terms and Conditions indicating that Graduate Accounts for those graduating in 2006 would be 2 years but these were new T&C's so hadn't been sent out yet.

Apparently theres not much I can do now until I have my formal complaint replied to so will wait and see.

And whilst I know I will still have my same overdraft limit but will have to pay interest would have just have been nice to know a bit longer in advance as in my mind I still had a year to pay it off and get it rid of by the time it converted.

Compound_2

Around this time last year, I alerted forum members to HSBC's hidden plan to totally scrap interest-free overdrafts for 2007 graduates. In breach of the Banking Code HSBC gave nobody 30 days notice, and many were notified only AFTER their accounts became chargeable. A major campaign against HSBC ensued, with students starting courses in 2004 complaining they were told they'd get interest-free time to pay off the overdraft. HSBC backed down and gave everybody 2 years interest free. I believe this was the offer for 2006 graduates.

Graduates of 2006 could make a similar complaint that when they started their course in 2003 they were indeed told that they'd get three years interest-free (this was HSBC policy until at least 2005 graduates, although it's not possible to tell from current HSBC documents what 2005 graduates have been getting in their third year which is just about to end). However, the third year was only £500 free so it's not as serious as depriving 2007 graduates of £1500. DEPENDING on what was in your Graduate Account T&C in 2006, they SHOULD have given people two years to prepare for the change.

mikepaulden

Compound wrote: »

Graduates of 2006 could make a similar complaint that when they started their course in 2003 they were indeed told that they'd get three years interest-free (this was HSBC policy until at least 2005 graduates, although it's not possible to tell from current HSBC documents what 2005 graduates have been getting in their third year which is just about to end).

HSBC were indeed informing those graduating in 2006 that they would get an interest-free overdraft for 3 years. Have a look at their webpage from 1st July 2006 (the month I was moved onto their graduate service), courtesy of the Internet Archive:

http://web.archive.org/web/20060701043236/http://www.hsbc.co.uk/1/2/personal/current-accounts/graduate-service/more-benefits

They advertise clearly that their graduate service allows you to "bring your overdraft down slowly", and that in the third year after graduation the interest-free amount is "up to £500". There is no small print around the advertisment stating that the interest-free amount is subject to future change.

HSBC can argue all they want that it's within their rights to alter account terms and conditions as and when they see fit, but it is a clear case of misleading advertising to state that a service allows you to bring your overdraft down "slowly" with a £500 interest-free amount in the third year after graduation, and then to pull the rug from under customers' feet just two years later and demand almost immediate repayment of up to £1000 with the threat of a punitive rate of interest on any remaining balance.

I don't know if there are any law graduates affected here who fancy a go at pursuing HSBC along these lines, but after the way they've treated their customers in this instance I'm not sure I want to stay with them even if they recognise their mistake and recant. The tragedy from HSBC's point of view is that for five years they've offered myself and others like me interest-free cash and other incentives to coerce us into being loyal customers for life, and then in a short-sighted and desperate attempt to claw back this money sooner due to the credit crunch they've completely alienated those very customers.

scottishlass

Thank you I was looking for something like that but hadnt gotten round to finding it. Will add it to my pile of evidence which will be sent once HSBC reply to my inital complaint. Although first I need to find exactly when I was transferred over as the 6th July page says 2 years......

JimBlizz

I'm in the same situation - local branch staff didn't know anything about it until I mentioned it (I used to work in the branch).

aimex

i had the same letter at begining of June to say they were giving me 28 days notice that they were cancelling my interest free overdraft. However, yesterday i rec`eived letter to say that they had reviewed the overdraft and were offering me a new one on new terms. these are that first £1000 is free and then have £500 above that - 18.9% interest applies to it though!

So im in the same position as i was before i received the first letter really - can still go overdrawn by £1000! anyone else had this?
xxx

ellie_jane_2

aimex wrote: »

i had the same letter at begining of June to say they were giving me 28 days notice that they were cancelling my interest free overdraft. However, yesterday i rec`eived letter to say that they had reviewed the overdraft and were offering me a new one on new terms. these are that first £1000 is free and then have £500 above that - 18.9% interest applies to it though!

So im in the same position as i was before i received the first letter really - can still go overdrawn by £1000! anyone else had this?
xxx

I received the second letter on Tuesday as well, and as I am not getting anywhere with HSBC customer service, I have taken the advice of another MSE and have spoken with the Financial Ombudsman. They have advised me that due to the conflicting and confusing information, I have a good case for complaint. The website is: http://www.financial-ombudsman.org.uk/