Free Over Drafts for Students, A generous benefit or bait to hook students
For a number of years now, the main UK high street banks have been offering free overdrafts of up to about two thousand pounds to students. If you have recently graduated from University or even if you are still a student at the moment, you will be more than familiar with the practice and you may even have a student overdraft as you read, or be in the process of paying one off.
While these overdrafts are extremely popular with students, they have also been the subject of a lot of criticism and debate both from parents and also from debt groups. While students continue to snap up these overdrafts at rates of close to one hundred per cent, many others say that there is no need for students, who are already among the most indebted members of society to take on another form of debt. The fact that it is interest free and very convenient both to borrow and repay does not make up for the fact that it is another debt that will fall to be repaid eventually. Another criticism of the overdrafts is that they are simply being used as bait to hook students onto a life of perpetual debt. And while the overdrafts are interest free while the student remains at university, most of them will start charging interest as soon as you graduate.
On the other hand, banks defend the practice as a popular and effective way of providing cheap, in this case free credit to some people who need it now more than they will in the future, but who are likely to be able to pay it back in the future.