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Credit card promotion among students a worry

During the Student Life Fair at the National University of Singapore a few weeks ago, the DBS Live Fresh Card was being heavily promoted among students, with enticements such as $30 in Uber credits.

The eagerness of promoters to attract applicants was such that the exact nature and terms of the card were not clearly communicated to students. Indeed, some were not aware that this "free card" which did not require any proof of income was, in fact, a credit card with a $500 credit limit.

I am concerned that unsecured credit of any sum can be extended by an esteemed financial institution such as DBS Bank to students with no proof of steady income or collateral.

I am more worried that such credit cards are being indiscriminately promoted at such fairs, and applicants are not sufficiently informed of the nature of the product and important conditions attached, such as the consequences of default.

While the terms and conditions may be printed on the application leaflet, it is wrong not to highlight the most important terms, and to expect students to pore over the fine print meticulously, especially during a crowded student fair.

This is especially problematic, as the consequences of the mismanagement of unsecured debt of any sum can be dire owing to the workings of steep compound interest and penalty fees.

With little income or assets, students' ability to extricate themselves from such financial tangles is very limited.

The danger is further exacerbated by the rise in youthful expectations of consumption. These provide yet more incentives to yield to today's temptations and defer the financial consequences to a seemingly distant tomorrow.

I hope that all parties, from financial institutions to the state and regulatory bodies, will act to cease this dangerous and irresponsible practice.

I also exhort students to be mindful of the dangers of unsecured credit, and to be fully aware of the content of any contract they sign.

Adi W. Chew

A version of this article appeared in the print edition of The Sunday Times on September 24, 2017, with the headline 'Credit card promotion among students a worry '. Print Edition | Subscribe