And Now, Credit Cards for Students

Let us say that you are a student of a prominent college or university, for instance, the Amity University or any of the constituent colleges of the University of Delhi. It is the 25th of the month and your stipend from the home is still 6 days away. You are broke but there is a date on your calendar. You have already spent your money on a Tinder Premium subscription, which led you here. You look hopelessly towards your roommate, whom you already owe 2K. Some days ago, you saw an ad for students’ credit cards. You go ahead and apply for one.

Earlier credit cards were offered to only earning individuals. With the onset of data intelligence, new-age startups are offering these to college students. Students are more reckless than employed people thereby posing a higher risk. The rates charged on these credit cards are much higher than the rates on usual credit cards. The higher interest charge helps to account for the increased risk of non-payment.

Ideally, you should avoid getting into the trap of credit. Not just in college but at any stage of life. A golden piece of advice from the world’s greatest investor, “Never spend more than you have.” Despite that, the idea seems lucrative. The author presents two arguments that may help you to make better financial decisions.

Some students avail themselves of these intending to never pay back. The credit card company can still try to recover their claim through legal means. If not that, it ends up destroying your credit rating at a very early stage of your life. Credit rating is a life-long score that lenders use to give loans to any person, say for home, automobile or education. And guess what? Banks may charge higher interest from you in the future because you are a risky applicant.

The trap of a credit card habit is very addictive and interest rates are high. They may seem small as you only need a sum of 5–10K for a month or so. In terms of percentage, they go up to 40–50% per annum. You should manage your expenses from the start of the month. Worldwide, people end up paying tons of money as interest because of their bad spending habits. Some even go bankrupt because of that plastic card. Indeed! In the end, the author wants to paraphrase a line from his mother:

“If you believe it to be a wrong habit, try not to initiate it even. For fun, adventure, novelty, or whatever. You never know if takes hold of you.”