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                                                                    EXHIBIT 10.7

                             HOUSEHOLD INTERNATIONAL

                         DEFERRED FEE PLAN FOR DIRECTORS

         SECTION 1. PURPOSE. The purpose of the Household International Deferred
Fee Plan (the "Plan") is to provide non-management directors (the "Directors")
of Household International, Inc. (the "Company") the opportunity to defer
receipt of cash compensation paid by the Company to such person in their role as
a Director. The Plan is designed to aid the Company in attracting and retaining
as members of its Board of Directors persons whose abilities, experience and
judgment can contribute to the well-being of the Company.

         SECTION 2. EFFECTIVE DATE. The effective date of this Plan is January
10, 1995. The Plan was subsequently amended on September 8, 1997, September 1,
1999 and September 9, 2003.

         SECTION 3. ELIGIBILITY. Any Director of the Company who is not deemed
to be an employee of the Company or any subsidiary thereof is eligible to
participate in the Plan.

         SECTION 4. DEFERRED COMPENSATION ACCOUNT. Except as may be required in
accordance with Section 11 hereof, an unfunded deferred compensation account
(the "Account") shall be established for each Director who elects to participate
in the Plan.

         SECTION 5. AMOUNT OF DEFERRAL. A participant may elect to defer receipt
of all or a specified part of the compensation payable to the participant for
serving on the Board of Directors or committees of the Board of Directors of the
Company or any of its subsidiaries. An amount equal to the compensation
deferred, as reflected in the election referred to in Section 6 hereof, will be
credited to the participant's Account, in the form of cash (the "Cash
Component") or phantom Company Common Stock units (the "Stock Component"), on
the date such compensation would otherwise be initially payable. Any
compensation deferred pursuant to an election made after March 28, 2003 can only
be credited to the Cash Component of the participant's Account.

         SECTION 6. TIME OF ELECTION OF DEFERRAL. Except as set forth herein, an
election to defer compensation shall be made on an annual basis on or before
December 15th of each year on forms approved for that purpose and shall be
effective when filed with the Secretary of the Company with respect to all
compensation, or any part thereof so elected to be deferred, that is paid in the
calendar year following the calendar year in which the election is made. For the
year 1995, the election shall be made prior to January 30, 1995, and shall be
effective when made with respect to any compensation to be paid in the period
January 30, 1995 through December 31, 1995. In the case of newly elected
Directors who first become eligible to participate in the Plan

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subsequent to January 1 of any calendar year, such newly eligible participant
shall be entitled to make an election to defer compensation for services to be
performed subsequent to the election provided such election is made within 30
days after the date such Director becomes eligible. In this case, such election
shall be effective when made with respect to any compensation to be paid during
the period beginning with the date following the date of the election through
December 31 of the same initial year of participation.

         SECTION 7. HYPOTHETICAL INVESTMENT. Each Account may have a Cash
Component, a Stock Component or a combination of both and will be credited on
each date compensation is to be paid to Directors with:

         (1)      if the compensation is to be placed in the Cash Component, the
                  amount elected to be deferred plus interest from the date on
                  which the deferred compensation that is credited to the Cash
                  Component would initially have been payable, until payment, at
                  a rate equal to the United States five-year treasury rate plus
                  HFC's borrowing spread over that rate on the first day of each
                  calendar quarter in which such interest is credited to the
                  participant's Account with interest compounded quarterly, or

         (2)      prior to March 28, 2003, if the compensation was to be placed
                  in the Stock Component, the amount elected to be deferred was
                  used to purchase units of Company Stock (including fractional
                  shares) using the fair market value of such Company Stock on
                  the date the compensation would otherwise have been paid. As
                  of March 28, 2003, the units of Company Stock have been
                  converted from units of Household International, Inc. common
                  stock to a right to receive HSBC Holdings plc ordinary shares
                  and therefore Company Stock refers to either common stock of
                  Household or ordinary shares of HSBC as appropriate. After
                  March 28, 2003, the Cash Component will be credited on each
                  dividend payment date for the Company Stock with the aggregate
                  cash dividend which would have been paid if the existing units
                  of Company Stock were actual shares of the Company Stock. For
                  purposes of the Plan, the "fair market value" of one share or
                  unit of Company Stock shall be the closing price on the London
                  Stock Exchange of a share of such stock for the trading date
                  preceding the respective determination date.

         SECTION 8. VALUE OF DEFERRED COMPENSATION ACCOUNTS. The value of each
participant's Account shall include compensation deferred and interest or
dividends credited thereon, pursuant to Section 7 of the Plan. All deferred
amounts to be paid to a participant pursuant to the Plan are to be paid as soon
as practicable following the payment date, with

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the value of the phantom Common Stock units being the fair market value of an
equal number of shares of the Company's Common Stock on the date of payment.

         SECTION 9. PAYMENT OF DEFERRED COMPENSATION. No withdrawal may be made
from the participant's Account prior to the date specified by the participant in
his or her election to defer compensation except as provided in Section 10. At
the participant's election, deferral of compensation may be made to a specific
date, to immediately after the end of the calendar year in which the participant
terminates service as a Director, or to the earlier of either one of such dates.
Any deferral must be for a period of at least two years following the year for
which the compensation is earned, unless service as a Director terminates
earlier. Deferred compensation and interest or dividends (including appreciation
or loss) thereon will be payable in cash from the Cash Component or shares of
Company Stock from the Stock Component either in a lump sum or in such number of
quarterly or annual installments as the participant chooses, subject to the
participant's right to change such method of distribution no later than twelve
months prior to the first date deferred compensation is to be paid. A
participant may choose to receive an equivalent number of HSBC American
depositary shares instead of Company Stock and any fraction of a share will be
paid in cash. If a participant elects to receive payment from his or her Account
in installments, the participant's Account will continue to accrue interest or
dividends (and appreciation or loss) during the installment period. Payments
made from the Account shall first be made from the Stock Component of the
Account until such Component has been reduced to zero, and then from the Cash
Component. Interest or dividends credited to a participant's Account during the
installment period will be paid on the next installment payment date.

         SECTION 10. HARDSHIP. In the event of a substantial, unforeseen
hardship, a participant may file a notice with the Secretary of the Company to
be presented to the Compensation Committee of the Board of Directors, advising
the Committee of the circumstances of the hardship, and requesting a withdrawal
of previously deferred amounts, or, where a former Director is receiving annual
installment payments, requesting accelerated payment. The Committee, in its sole
discretion, may agree to accelerate distribution of all or a part of amounts
previously deferred. Should the Committee agree, such distribution shall occur
on a date set by the Committee (the "Hardship Distribution Date") that is at
least six (6) months from the date the Committee approves the hardship
withdrawal request. The Committee shall determine, in its sole discretion, how a
current participant's Cash Component and Stock Component shall be charged for
the withdrawal. No member of the Committee may vote on, or otherwise influence a
decision of the Committee concerning his or her request for a hardship
withdrawal. A hardship withdrawal by a participant shall have no effect on any

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amounts remaining in the participant Account, and shall not have any effect on
any current or future deferral election after the hardship withdrawal.

         For purposes of this paragraph, a substantial unforeseen hardship is a
severe financial hardship resulting from extraordinary and unforeseeable
circumstances arising as a result of one or more recent events beyond the
participant's control. To the extent such hardship is or may be relieved (i)
through reimbursement or compensation by insurance or otherwise, (ii) by
liquidation of the participant's assets, to the extent the liquidation of such
assets would not itself cause a financial hardship, and (iii) by cessation of
deferrals under the Plan, accelerated payment may not be made. Withdrawals of
amounts because of an unforeseen hardship may only be permitted to the extent
reasonably necessary to satisfy the hardship. Examples of what are not
considered to be unforeseeable hardships include the need to send a
participant's child to college, or the desire to purchase a home.

         SECTION 11. CHANGE IN CONTROL. A `Change in Control' shall be deemed to
occur when and if:

         (a)      Any "person" (as defined in Section 13(d) and 14(d) of the
                  Securities Exchange Act of 1934, as amended (the "Exchange
                  Act")), excluding for this purpose the Company and any
                  subsidiary of the Company, or any employee benefit plan of the
                  Company or any subsidiary of the Company, or any person or
                  entity organized, appointed or established by the Company for
                  or pursuant to the terms of such plan which acquires
                  beneficial ownership of voting securities of the Company, is
                  or becomes the "beneficial owner" (as defined in Rule 13d-3
                  under the Exchange Act) directly or indirectly of securities
                  of the Company representing twenty percent (20%) or more of
                  the combined voting power of the Company's then outstanding
                  securities; provided, however, that no Change in Control shall
                  be deemed to have occurred as the result of an acquisition of
                  securities of the Company by the Company which, by reducing
                  the number of voting securities outstanding, increases the
                  direct or indirect beneficial ownership interest of any person
                  to twenty percent (20%) or more of the combined voting power
                  of the Company's then outstanding securities, but any
                  subsequent increase in the direct or indirect beneficial
                  ownership interest of such a person in the Company shall be
                  deemed a Change in Control; and provided further that if the
                  Board of Directors of the Company determines in good faith
                  that a person who has become the beneficial owner directly or
                  indirectly of securities of the Company representing twenty
                  percent (20%) or more of the combined voting power of the
                  Company's then

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                  outstanding securities has inadvertently reached that level of
                  ownership interest, and if such person divests as promptly as
                  practicable a sufficient amount of securities of the Company
                  so that the person no longer has a direct or indirect
                  beneficial ownership interest in twenty percent (20%) or more
                  of the combined voting power of the Company's then outstanding
                  securities, then no Change in Control shall be deemed to have
                  occurred; or

         (b)      During any period of two (2) consecutive years (not including
                  any period prior to September 1, 1999), individuals who at the
                  beginning of such two-year period constitute the Board of
                  Directors of the Company and any new director or directors
                  (except for any director designated by a person who has
                  entered into an agreement with the Company to effect a
                  transaction described in subparagraph (a), above, or
                  subparagraph (c), below) whose election by the Board or
                  nomination for election by the Company's shareholders was
                  approved by a vote of at least two-thirds of the directors
                  then still in office who either were directors at the
                  beginning of the period or whose election or nomination for
                  election was previously so approved, cease for any reason to
                  constitute at least a majority of the Board (such individuals
                  and any such new directors being referred to as the "Incumbent
                  Board"); or

         (c)      Consummation of (1) an agreement for the sale or disposition
                  of the Company or all or substantially all of the Company's
                  assets, (2) a plan of merger or consolidation of the Company
                  with any other corporation, or (3) a similar transaction or
                  series of transactions involving the Company (any transaction
                  described in parts (1) through (3) of this subparagraph (c)
                  being referred to as a "Business Combination"), in each case
                  unless after such a Business Combination (x) the shareholders
                  of the Company immediately prior to the Business Combination
                  continue to own, directly or indirectly, more than sixty
                  percent (60%) of the combined voting power of the then
                  outstanding voting securities entitled to vote generally in
                  the election of directors of the new (or continued) entity
                  (including, but not by way of limitation, an entity which as a
                  result of such transaction owns the Company or all or
                  substantially all of the Company's former assets either
                  directly or through one or more subsidiaries) immediately
                  after such Business Combination, in substantially the same
                  proportion as their ownership of the Company immediately prior
                  to such Business Combination, (y) no person (excluding any
                  entity resulting from such Business Combination or any
                  employee benefit plan (or

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                  related trust) of the Company or of such entity resulting from
                  such Business Combination) beneficially owns, directly or
                  indirectly, twenty percent (20%) or more of the then combined
                  voting power of the then outstanding voting securities of such
                  entity, except to the extent that such ownership existed prior
                  to the Business Combination, and (z) at least a majority of
                  the members of the board of directors of the entity resulting
                  from such Business Combination were members of the Incumbent
                  Board at the time of the execution of the initial agreement,
                  or of the action of the Board, providing for such Business
                  Combination; or

         (d)      A tender offer is made for thirty percent (30%) or more of the
                  Company's Common Stock, which tender offer has not been
                  approved by the Board of Directors of the Company; or

         (e)      Approval by the shareholders of the Company of a complete
                  liquidation or dissolution of the Company.

         Notwithstanding any other provision of the Plan, if a Change of Control
occurs, then the Company shall create a trust or take such other actions as are
appropriate to protect each participant's Account.

         SECTION 12. DESIGNATION OF BENEFICIARY. A participant may designate a
beneficiary or beneficiaries which shall be effective upon filing written notice
with the Secretary of the Company on the form provided for that purpose. If no
beneficiary is designated, the beneficiary will be the participant's estate. If
more than one beneficiary statement has been filed, the beneficiary or
beneficiaries designated in the statement bearing the most recent date will be
deemed the valid beneficiary or beneficiaries.

         SECTION 13. DEATH OF PARTICIPANT OR BENEFICIARY. In the event of a
participant's death before he or she has received the full value of his or her
Account, the then current value of the participant's Account shall be determined
as of the day immediately following death and such amount shall be paid to the
beneficiary or beneficiaries of the deceased participant as soon as practicable
thereafter in cash in a lump sum. If no designated beneficiary has been named or
survives the participant, the beneficiary will be the participant's estate.

         SECTION 14. PARTICIPANT'S RIGHTS UNSECURED. The right of any
participant or beneficiary to receive payment under the provisions of the Plan
shall be an unsecured claim against the general assets of the Company, and no
provisions contained in the Plan shall be construed to give any participant or
beneficiary at any time a security interest in the Account or any other assets
of the Company.

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         SECTION 15. STATEMENT OF ACCOUNT. Statements will be sent to
participants following the end of each year as to the value of their Accounts as
of December 31 of such year.

         SECTION 16. ASSIGNABILITY. No right to receive payments hereunder shall
be transferable or assignable by a participant or a beneficiary, except by will
or by the laws of descent and distribution.

         SECTION 17. ADMINISTRATION OF THE PLAN. The Plan shall be administered
by the Compensation Committee of the Board of Directors of the Company. The
Committee shall conclusively interpret the provisions of the Plan and shall make
all determinations under the Plan. The Committee shall act by vote or written
consent of a majority of its members.

         SECTION 18. AMENDMENT OR TERMINATION OF PLAN. This Plan may at anytime
or from time to time be amended, modified or terminated by the Board of
Directors of the Company. No amendment, modification or termination shall,
without the consent of a participant, adversely affect such participant's
accruals on his or her prior elections.

         SECTION 19. GOVERNING LAW. This Plan shall be governed by and construed
in accordance with the laws of the State of Illinois.

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