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A leading bank has decided to hit new graduates with interest charges of ten per cent on debts.

It's the time of year when students and graduates are usually besieged by enticing account offers from the UK's high street banks.

However, as reported by the Times, HSBC has taken a hard new financial line.

The bank has announced plans to abolish free borrowing for new graduates.

This means that from this summer, thousands of university leavers will have to pay almost ten per cent in interest on their overdrafts.

This is in sharp contrast to previous HSBC policy - and that of most other high street lenders.

Usually, UK banks offer new graduates the chance to recover from university debts by allowing them interest-free overdrafts for up to three years or even more.

Karen Garner, of HSBC, explained the reasoning behind the new policy:

She said: "This gets the message across that there is a cost to borrowing - and prepares graduates for the transition from student life to that of a young working professional."

Many students might argue they already know the cost of borrowing all too well - the average student now leaves university with debts of around £12,000.

However, new graduates can take heart from the fact that the high street banking industry is more competitive than ever - and there are several packages available that still offer new graduates interest-free overdrafts.