In the U.K. tens of thousands of new graduates will be hit by overdraft interest payments after HSBC announced plans to become the first high street bank to scrap free borrowing for university leavers.

Traditionally, banks allow new graduates a three-year interest-free period on their student overdrafts so they can clear the balance. But students who have an account with HSBC will have to pay nearly 10 per cent interest on their overdraft from August. For those with the maximum overdraft of £1,500, this will cost almost £12 a month, or £142.20 a year.

Students who want to avoid paying interest on their overdraft must pay a fee of nearly £120 a year. (From Times Online, June 20, 2007)

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