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An HSBC spokesperson has defended controversial changes to the graduate overdraft the bank offers, insisting they will help graduates realise there "is a cost to borrowing".

HSBC caused consternation among students last month when it announced plans to abolish free borrowing for new graduates.

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

However, a spokesperson for HSBC said recently that the alteration would benefit students by helping them "differentiate their student account from their graduate account" and enabling them to "know where they stand".

The representative continued: "What we're trying to do is help them manage it sooner rather than later.

"Yes, there is no longer an interest free overdraft. And there's no longer the comfort from an interest free overdraft. But neither is there any spike either.


"The best way to manage your finances is to know what you're dealing with right from the offset and we feel with a flat 9.9 per cent rate with all borrowing, you will know where you stand."

Many students might argue they're only too aware of their financial predicament.

The average UK student now leaves university around £12,000 in debt.