Financial services providers should stop offering interest-free overdrafts to students in order to help alleviate the UK's debt crisis, one bank spokesperson has suggested.
According to a representative of HSBC, interest-free overdrafts encourage borrowing among students, thereby leaving them in financial difficulty once they have graduated.
Today's students are leaving university with more debt than any previous generation, with HSBC's plan to remove this interest-free option helping to hammer home the message that credit is not free, said the official.
"We're not trying to pull the rug from under their feet," she remarked.
"The overall message is that there is a cost of borrowing with regards to the account you take."
Additionally, the spokesperson claimed that HSBC, which has removed the interest-free overdraft for final year studiers and introduced a staggered approach to student lending, is helping borrowers to make a smoother transaction between student and graduate accounts.
HSBC's decision to apply an interest charge for final year students accompanies the removal off its two-year interest-free deal to graduates and will come into effect for all of those studying in the academic year beginning August.
Calls to scrap free student overdrafts
Financial Services > e-banking > Banking news
Calls to scrap free student overdrafts
Thu, 05 Jul 2007
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